UPI MDR Charge: A big news has come out this time. The decision to impose charges on UPI has been postponed till Diwali. Modi government has currently postponed the UPI Merchant Discount Rate (MDR) in view of the festive season. MDR charge was to be implemented from October 15 on UPI transactions above ₹2000. There was to be a charge of 0.4%. However, now the Modi government has taken a U-turn and postponed MDR till Diwali.
National Payments Corporation of India i.e. NPCI has decided to postpone it in view of the festive season. NPCI has said that it will be installed immediately after Diwali, but has not yet given the date.
NPCI, the organization that operates the country’s largest digital payment platform UPI, has said in its statement that keeping in mind the festive season, charges on person-to-merchant (P2M) transactions have been stopped. The new date will be announced later. It is believed that after Diwali, a new decision regarding this may be taken in the second week of November.
Crores of traders got relief
This decision of the government is going to provide relief to crores of traders during the festive season. This is a big news for traders in the festive season, because for them the biggest business opportunities in the market are on festivals like Diwali, Dussehra, Navratri and others. In view of this, the Chamber of Trade and Industry i.e. CTI was also continuously demanding to postpone it citing huge hit to the business.
Flat rate model of UPI MDR
Apart from this, according to the circular issued by National Payment Corporation of India (NPCI), five UPI payment categories have been kept under flat-rate model (UPI MDR Flat Rate Model), that is, no matter the amount of payment, the same charge will be applicable. For this, the government has set a concessional rate of Rs 5 per transaction. This simply means that even if the UPI payment is more than Rs 2000 or Rs 10,000 or more, the MDR will remain only Rs 5.
Understand the complete mathematics of MDR charge
merchant Discount Rate i.e. MDR, is the fee that a merchant or shopkeeper pays to banks and payment service providers in exchange for using debit/credit card or digital payment (UPI) facility i.e. point of sale machine or payment gateway. This fee is taken to meet the costs of running the digital infrastructure and transfer network properly. This charge has to be paid by the merchant, not by the customer.
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