NPCI Delays UPI MDR Implementation to Post-Diwali
The National Payments Corporation of India has postponed the Merchant Discount Rate rollout for UPI transactions to a date after Diwali, responding to trader concerns.
MDR for UPI transactions exceeding ₹2,000 postponed to post-Diwali.
Decision made following appeals from traders and the Prime Minister's Office.
Traders express relief, emphasizing the need for affordable digital payment systems.
The National Payments Corporation of India (NPCI) has announced a delay in the implementation of the Merchant Discount Rate (MDR) for UPI transactions, which was initially set for October 15. The new timeline will be determined for a date immediately following the Diwali festival, although no specific date has been provided. This decision comes as a response to strong appeals from the trading community, particularly in light of the upcoming festive season.
The decision to postpone the MDR rollout was reportedly made in the Prime Minister's Office, reflecting the government's recognition of the potential impact on traders. Praveen Khandelwal, the founder and secretary-general of the Confederation of All India Traders (CAIT), welcomed the announcement, stating that it would safeguard the interests of traders and help maintain the momentum of digital payments during the festive period.
Originally, the MDR was proposed to be set at 0.4% for UPI transactions over ₹2,000 at medium and large merchant establishments. Different rates were to apply to transactions in capital markets and strategic sectors. The NPCI confirmed that the Merchant Discount Rate on select Person-to-Merchant (P2M) UPI transactions would be implemented after Diwali, with further details to be communicated later.
The Supreme Court has mandated that the NPCI, along with the Union government and the Reserve Bank of India (RBI), submit affidavits by late October to explain the reasoning behind the MDR imposition on specific UPI transactions. Khandelwal expressed gratitude to Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for their understanding of traders' concerns, highlighting the importance of this decision for the business community.
The CAIT described the delay as a timely and pragmatic choice, especially during a period when many traders and MSMEs rely on increased business activity. They cautioned that additional transaction costs could burden merchants with thin profit margins and hinder the broader acceptance of digital payments. Additionally, LPG distributors have sought exemptions from MDR, arguing that such fees would negatively impact their earnings and potentially push consumers back to cash transactions, complicating payment processes.
