Clarity Awaited on MDR Charges for UPI Transactions Post Diwali

New Delhi, November 10 (Daily Kiran) : Merchants in India are looking for clarity regarding the implementation of Merchant Discount Rate (MDR) charges on Person-to-Merchant (P2M) Unified Payments Interface (UPI) transactions. The National Payments Corporation of India (NPCI) had postponed the originally scheduled date of October 15 to avoid additional transaction costs during the festive season.

As the Diwali festivities conclude and Bhai Dooj approaches on November 11, both merchants and customers are eager to learn when these charges will officially take effect. The UPI and Service Operations Committee had decided that the MDR charges would be implemented immediately after Diwali, but an exact notification regarding the effective date is yet to be released.

According to NPCI’s Frequently Asked Questions (FAQ), an MDR charge of 0.4% will apply to eligible P2M UPI transactions exceeding ₹2,000. However, for transactions of ₹75,000 or more, the fee is capped at ₹300. For instance, if a merchant receives a payment of ₹1,00,000 via UPI, they would typically pay a charge of ₹400 at the 0.4% rate. Nevertheless, due to the maximum limit, the MDR fee would be restricted to ₹300.

Certain sectors, including railways, telecommunications, insurance, and fuel, will have a discounted flat MDR fee of ₹5 per transaction for payments above ₹2,000, instead of the percentage-based rate. Additionally, transactions related to the capital markets will incur a reduced MDR rate of 0.02%, which applies to payments made to mutual funds, securities, stock brokers, and dealers, also capped at ₹300.

It is important to note that MDR is a transaction fee charged to merchants, which they must pay when receiving payments. Customers using UPI for payments will not be affected by this charge. NPCI has also clarified that transfers between individuals using UPI will remain free, as the proposed MDR charges will not apply to Person-to-Person (P2P) UPI transactions.