New Delhi: Merchants are awaiting a revised rollout date from the National Payments Corporation of India (NPCI) of Merchant Discount Rate (MDR) charges on select person-to-merchant (P2M) Unified Payments Interface (UPI) transactions. NPCI had deferred the introduction of MDR charges beyond the originally planned October 15 rollout to avoid additional transaction costs during the festive season.
With Diwali celebrations over and Bhai Dooj falling November 11, merchants and customers are awaiting clarity on implementation date as UPI and Services Steering Committee had decided that MDR these transactions would be implemented immediately after Diwali, with the exact effective date to be notified separately. NPCI’s frequently asked questions said that an MDR of 0.4 per cent will apply to eligible P2M UPI transactions exceeding Rs 2,000 and the charge will be capped at Rs 300 for transactions of Rs 75,000 and above.
For instance, a merchant receiving a UPI payment of Rs 1 lakh would have incurred a 0.4 per cent charge of Rs 400, if not for the prescribed cap, limiting the MDR to Rs 300. Certain merchant categories, including railways, telecom services, insurance and fuel, will attract a concessional flat MDR of Rs 5 per transaction for payments over Rs 2,000, rather than the standard percentage-based rate.
Capital market transactions attract a concessional MDR of 0.02 per cent, including payments towards mutual funds, securities, stockbrokers and dealers, subject to a maximum cap of Rs 300. MDR is a merchant-side transaction fee that will be borne by the merchant receiving the payment, and the customer making the UPI transaction will remain unaffected. The NPCI has also clarified that UPI transfers between individuals will remain free, as proposed MDR will not apply to person-to-person (P2P) UPI transfers.
