NEW DELHI: The government said on Saturday that the proposed merchant discount rate (MDR) for UPI transactions will be nominal and apply only to a limited set of merchants for transactions above a threshold, while seeking to assure users that all person-to-person transactions will remain free and consumers who make the payment will not face any fees.“A vast majority of the transactions will remain free of charge for merchants on UPI. MDR, if introduced, will only be threshold-based and not levied on a blanket basis to all,” the statement said, adding that the UPI and Services Steering Committee, headed by NPCI, will decide on the MDR, if any.It also dismissed reports of the charges being imposed under pressure from the US, which was seen to be pushing the case of Visa and Mastercard that levy MDR on credit card and debit card transactions, which are up to 2%, and usually not passed on to consumers unless the merchant is keen on a cash transaction. “If external pressure had been a factor, the government would not have introduced UPI in 2016 or made it free of charge for both merchants as well as citizens since Jan 2020 and ensured that it became the world’s largest real-time interoperable payment system.
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The amendment should be viewed in the context of the government’s broader objective of ensuring that India’s digital payment infrastructure remains sustainable, competitive, and capable of serving the country’s rapidly expanding digital economy.”The finance ministry argued the move was necessary to expand the infrastructure into rural and semi-urban areas. Officials have indicated an MDR of 0.25% to 0.4% may be allowed for UPI transactions above Rs 2,000, provided they are not person-to-person, with a ceiling on the charge.
