Why will 0.4% charge be levied on UPI payments made to shops & businesses?

UPI's annual operating costs, including infrastructure, fraud prevention and bank support, are ~₹20,000 crore, NPCI said. Government incentives alone can limit long-term investment and innovation by banks and fintech. The 0.4% MDR on person-to-merchant UPI transactions above ₹2,000 will make the ecosystem sustainable and encourage new fintech and tech companies to enter the digital payments space.