UPI Merchant Discount Rate Charges Delayed Until Post-Diwali
The implementation of UPI Merchant Discount Rate charges for transactions above Rs 2,000 has been postponed to the second week of November.
UPI MDR charges for transactions over Rs 2,000 will now take effect after Diwali.
The fee is set at 0.4% for transactions above Rs 2,000, with a cap for larger payments.
The delay aims to accommodate the festive shopping season and allow merchants to adapt.
The rollout of Merchant Discount Rate (MDR) charges for UPI transactions exceeding Rs 2,000 has been rescheduled to the second week of November, following Diwali. This decision was made by the UPI and Services Steering Committee on October 13, in response to requests from traders to postpone the implementation during the busy festive shopping period. The National Payments Corporation of India (NPCI) confirmed that the new date for the rollout will be communicated later.
Originally set for October 15, the implementation was deemed ill-timed due to the anticipated surge in consumer spending during the festive season. The delay allows payment firms and merchants additional time to prepare their systems for the changes, addressing concerns about introducing new charges amidst heightened shopping activity.
The UPI Steering Committee had previously established the MDR at 0.4% for transactions above Rs 2,000, which translates to a fee of Rs 8 for every Rs 2,000 spent. For transactions in specific sectors, such as railways and telecom, a flat MDR of Rs 5 will apply for payments over Rs 2,000. The government has indicated that these charges are necessary to support the infrastructure of UPI, which includes cybersecurity and customer support.
The introduction of these charges has raised concerns among merchants, particularly small businesses that rely heavily on digital payments. Experts warn that if the fees become burdensome, it could deter merchants from accepting UPI payments, potentially leading to higher prices for consumers. The government clarified that the charges would be borne by merchants, not consumers, and would be capped at Rs 300 for transactions of Rs 75,000 or more.
Looking ahead, the NPCI is expected to announce the specific implementation date soon. As the festive season approaches, stakeholders are urged to prepare adequately for the changes to ensure a smooth transition and maintain the momentum of digital payment adoption across the country.
