MDR on UPI payments in India deferred to after Diwali
What's the story
The National Payments Corporation of India (NPCI) has postponed the rollout of merchant discount rate (MDR), on select person-to-merchant (P2M) unified payments interface (UPI) transactions, to immediately after Diwali. The decision was announced by the UPI and Services Steering Committee today. The new date for implementation will be announced separately.
Decision rationale
Relief for businesses during the festive season
The NPCI's move is aimed at easing the burden of additional transaction charges on merchants and consumers during the festive season. The decision was taken considering the potential impact of such charges during this time of year.
Fee details
What is MDR?
MDR is a fee levied on merchants for processing digital payments.
The proposed charges were for select P2M UPI transactions above ₹2,000 at 0.4% MDR.
There was also a cap of ₹300 for transactions of ₹75,000 and above, along with a flat rate of ₹5 for select categories.
These fees could have increased transaction costs during the festive season, prompting NPCI's decision to defer implementation.
Opposition
Requests from merchant bodies, fintechs, and payments companies
The decision to defer MDR implementation comes after requests from merchant bodies, fintechs, and payments companies. They had raised concerns over consumer sentiment ahead of festival sales, varying MDR rates, policies, and their applicability across different UPI transactions.