New Delhi: There is important news for businessmen making digital payments. National Payments Corporation of India (NPCI) has postponed the decision on implementing Merchant Discount Rate (MDR) on select UPI transactions till Diwali. Earlier this system was discussed to be implemented from October 15, but in view of the possible increase in shopping and digital payments during festivals, its deadline has been extended. NPCI said in a statement issued on Tuesday that the fee on select person-to-merchant (P2M) UPI transactions will be implemented soon after Diwali. However, its exact date will be announced later.
Why was the decision to implement MDR postponed?
NPCI’s UPI and Services Steering Committee has decided to extend the fee implementation time keeping in mind the festival season. According to media reports, merchant organisations, fintech companies and payment service providers had demanded to postpone this arrangement. He said that there is a boom in business during festivals and the implementation of new charges at such times can create confusion among traders. Earlier there was also discussion that the deadline for implementing the fee could be extended till January 2027, but NPCI’s October 13 statement said that it would be implemented only immediately after Diwali.
Which UPI transactions may attract charges?
Under the proposed arrangement, there is talk of imposing MDR on selected person-to-merchant (P2M) transactions. According to available information, a 0.4 percent charge is proposed on certain UPI transactions above Rs 2,000. However, this rate will not be applicable to all UPI payments. Detailed information is awaited regarding which categories of transactions will be charged and which will be exempted. In its latest statement, NPCI has not given complete details of all the categories of related transactions and the last date of implementation.
How much will be charged on payment of Rs 10,000?
If 0.4 per cent MDR is applicable on an eligible transaction, a payment of Rs 10,000 will attract a charge of Rs 40. This fee is called merchant discount rate, which is charged from the merchant in exchange for accepting digital payments. However, the actual charges will depend on the applicable terms and payment arrangements. Therefore, it would not be correct to assume that for every UPI payment of Rs 10,000, there will be an additional charge of Rs 40. Whether this will have a direct impact on ordinary consumers will depend on the final rules and how the charges are borne by merchants.
Will common people have to pay more for UPI payments?
At present, it is not clear from NPCI’s statement how the proposed fee will affect customers. MDR is basically the fee paid by the merchant for accepting digital payments. In some circumstances, merchants may bear these costs themselves, while in others it may impact pricing or payment arrangements. So it is not certain yet whether consumers will have to pay extra.
When will the new rule come into effect after Diwali?
NPCI has clarified that the fee will be implemented immediately after Diwali, but the date will be notified separately. Digital payments at retail shops, e-commerce platforms and other merchants are likely to increase during festivals. In such a situation, merchants and payment companies have got additional time to prepare before the new system is implemented. Now all eyes are on the next notification of NPCI, which is expected to provide more clarity regarding the date of the fee and its scope.
