Your UPI payments in India may soon attract a fee
What's the story
The Indian government is considering the imposition of Merchant Discount Rate (MDR) on large-ticket Unified Payments Interface (UPI) transactions.
According to a report by NDTV Profit, this fee would affect transactions worth ₹3,000 and above. Currently, small-ticket transactions are not covered under MDR.
The Payments Council of India had earlier requested the Centre to reconsider its zero MDR policy for UPI payments.
Fee
What is MDR?
MDR is a fee which merchants have to pay to banks/payment service providers in order to process digital transactions like credit/debit card payments, as well as those done by UPI.
It is the cost of allowing customers to pay digitally at the merchant's location.
MDR is calculated as a percentage of the transaction value, and ranges from 0.9-2% for different payment methods.
Policy shift
Major change in MDR application
The government is also considering allowing banks to impose MDR on the transaction value, in place of the merchant turnover. This would be a major change in the way MDR is applied.
Growth trajectory
UPI set to overtake Visa's daily transaction volume
In a major milestone for digital payments, UPI is set to overtake global payments giant Visa's daily transaction volume.
This would make it the world's largest retail interbank payment settlement platform.
On June 1, UPI clocked 644 million transactions and 650 million the next day. Meanwhile, Visa processed an average of 639 million daily transactions during FY24 but does not share daily transaction data.