The Unified Payments Interface (UPI) and Services Steering Committee has announced a deferment of the proposed Merchant Discount Rate (MDR) on specific person-to-merchant (P2M) transactions. This decision, made on October 13, pushes the implementation of these charges until after the Diwali festive period, citing the heightened consumer spending typical during this season.
Initially, the 0.4% MDR on select merchant payments exceeding ₹2,000 was scheduled to take effect from October 15. The committee has confirmed that a new implementation date will be communicated separately.
What is the Proposed UPI MDR?
Merchant Discount Rate (MDR) is a fee charged to businesses for processing digital payments. Under the proposed structure for UPI, a 0.4% charge would be applied to P2M transactions above ₹2,000. This charge would be capped at ₹300 per transaction.
For example, a merchant accepting a ₹3,000 UPI payment would incur a ₹12 fee at the standard 0.4% rate, subject to the applicable rules. The introduction of MDR for these specific UPI transactions marks a significant change in the digital payments landscape.
Impact on Businesses and Digital Payments
The deferment offers a temporary reprieve for merchants, particularly those handling higher-value transactions, during a critical retail period. The new charges, once implemented, are expected to affect the cost of accepting digital payments for businesses. The exact scope of transactions covered by this new charge will be crucial in determining its overall impact on merchants and the broader digital payments ecosystem in India.
As UPI continues to be a dominant payment channel across retail outlets, online platforms, and service providers in India, stakeholders are keenly awaiting the announcement of the revised implementation date and further details from the committee.