UPI MDR: The government recently introduced MDR charges for certain UPI transactions, requiring merchants to pay a nominal fee. However, according to a new report, the implementation of the proposed charge on large UPI transactions could be delayed by a few months. Under the proposed plan, merchants would have to pay a 0.4 per cent fee on UPI transactions above Rs 2,000. The charge was originally scheduled to come into effect from October 15. However, the National Payments Corporation of India (NPCI) is yet to take a final decision on whether to defer the rollout. If approved, the delay would give merchants additional time before the new fee structure is implemented for high-value UPI transactions.
According to a report by Moneycontrol, sources familiar with the matter told them that ‘Several payment industry bodies and merchants have requested NPCI to postpone the implementation until the festive season is over. The government also fears that MDR will increase the cost of business during festive sales even as inflation is rising.’
A delay could potentially give payment companies more time to update their systems and prepare for the new fee. Not only that, but it could also help the retailers to avoid additional pressure during India’s busy festive season, which runs from October to December and brings higher consumer spending.
The report also clarified that discussions over the delay are currently underway between NPCI, the body that governs UPI, and the Finance Ministry. NPCI is expected to give a final verdict on the delay within the next two days.
India had kept UPI payments free for more than six years, which has helped the platform to become a major part of everyday payments. However, the new charge that is said to come into effect starting October 15 has faced resistance from retailers and a large broker since it was announced.
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Merchant Discount Rate, which is also commonly known as MDR, is a small fee that merchants pay to payment processors, card networks and banks for processing electronic or digital transactions. While UPI transactions did not traditionally attract an MDR, the government has recently announced that a fee may be levied on merchants for certain UPI transactions.
However, the government clarified last month that UPI will now attract MDR, under which merchant payments of up to Rs 2,000 will continue to have zero MDR, but for transactions above Rs 2,000, the merchant has to pay an MDR of 0.4 per cent. The government have also capped the charges at Rs 300 for payments above Rs 75,000.