Incentives for BHIM-UPI, RuPay debit card transactions might be removed
What's the story
The Indian government is planning to withdraw the existing incentive scheme for BHIM-UPI and RuPay debit card transactions. This decision comes as part of a larger shift toward a differentiated pricing model for certain merchant transactions under India's Unified Payments Interface (UPI). The change will come into effect from October 15.
MDR
What is Merchant Discount Rate?
The new pricing model will see a 0.4% Merchant Discount Rate (MDR) on eligible person-to-merchant UPI transactions over ₹2,000.
The maximum charge per transaction under this scheme will be capped at ₹300.
However, person-to-person transactions as well as merchant payments up to ₹2,000 will continue to be free of charge.
Protection
Fund for small merchants
The government is planning to set aside 5% from these MDR collections into a fund aimed at protecting small merchants and helping them onboard. It is also working on a revamped version of the BHIM app.