There may be a change from this day instead of 15th October
New Delhi. The date of implementation of Merchant Discount Rate (MDR) on transactions related to Unified Payments Interface i.e. UPI may be extended. At present it is expected to be implemented from October 15, but now the government is considering the proposal to extend it further.
According to PTI, a proposal has come forward to extend the deadline for implementation of MDR from October 15 to January 1. A decision on this is expected in the next few days. However, no final decision has been taken yet regarding extending the date.
What is MDR?
Merchant Discount Rate or MDR is the fee that is charged from merchants accepting digital payments for processing transactions. Changes in MDR related to UPI may have an impact on payment companies and businesses related to digital payments.
Preparation to reduce GST on UPI MDR?
Additionally, the GST Council also considered the proposal to reduce GST on UPI Merchant Discount Rate (MDR) to 5 percent from the current 18 percent. Most states expressed concern about 18 percent GST on UPI MDR. Under the new UPI MDR framework, there is a plan to impose charges on high value merchant transactions. The proposal to reduce the GST rate to 5 percent comes at a crucial time for India's digital payments ecosystem. In the new UPI framework, an MDR of 0.4 per cent has been set for specific 'person-to-merchant' transactions above Rs 2,000, subject to certain conditions and relaxations. According to the government, about 96 percent of 'person-to-merchant' UPI transactions will not be affected.
Shares of fintech companies including Paytm fell
Shares of financial technology companies including Paytm and OneMobiKwik Systems closed down on Thursday amid reports of a proposal being considered to extend the deadline for implementing Merchant Discount Rate (MDR) on UPI from October 15 to January 1.