The government on Tuesday postponed the process of implementing 0.4% merchant discount rate (MDR) on transactions above Rs 2,000 through UPI. National Payments Corporation of India (NPCI) said that this fee will be applicable after Diwali. The revised date has not been announced yet. Earlier the deadline for implementing MDR was October 15. The UPI and Services Steering Committee has decided that the Merchant Discount Rate (MDR) on Person-to-Merchant (P2M) UPI transactions will be implemented immediately after Diwali due to festivals like Dussehra, Diwali and Chhath.
National Payments Corporation of India (NPCI) has announced this. The UPI and Services Steering Committee has decided to implement Merchant Discount Rate (MDR) on certain Person-to-Merchant (P2M) UPI transactions. This will come into effect immediately after Diwali. The committee has taken this decision keeping the festive season in mind.
According to the NPCI statement, the UPI and Services Steering Committee has decided to implement MDR on select person-to-merchant (P2M) UPI transactions immediately after Diwali in view of the festive season. The date will be announced separately. This year Diwali is falling on 8 November.
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What scheme did the government bring earlier?
MDR was to be charged from merchants on P2M transactions of more than Rs 2,000. Person to person (P2P) payments are going to remain free. Traders had raised objections to this plan. Traders said that this will unnecessarily increase the financial burden on them, while they are already paying income tax and GST.
Was this decision already going to be postponed?
The possibility of delay in this change was already being predicted. Several media reports had earlier claimed that the government was considering postponing the rollout by a few months. It could even go till January 2027. This decision was to be taken within the deadline of 15 October. Consumer spending generally increases significantly during the festive season that runs from October to December.
Also read: 'What is UPI charge for?' Asked questions on MDR but Supreme Court did not ban it
Why has this decision been postponed?
Transactions are more during the festive season. The traders were protesting citing financial burden on themselves. Payment companies were expected to get more time to prepare the new system. Investors were considering this fee as a possible source of income for payment companies. These companies were expected to get a share of its income.
What is MDR?
MDR is the fee that the merchant has to pay for taking digital payments. This is usually a fixed percentage of the transaction amount. The bank deducts it and deposits the remaining amount in the merchant's account.
Also read: Businessmen will celebrate No UPI Day in protest against MDR, demonstration will be held on October 2
What is NPCI?
NPCI is the organization that runs the retail payment and settlement system in the country. It has been created by the Reserve Bank of India (RBI) and the Indian Banks Association (IBA). This system is appreciated all over the world.