The National Payments Corporation of India (NPCI) on Tuesday announced the merchant discount rate (MDR) for Unified Payments Interface (UPI) transactions, stating that a 0.4% charge will be levied on person-to-merchant payments above Rs 2,000.
The MDR will come into effect from October 15. “For transactions of Rs 75,000 and above, the MDR will be capped at Rs 300 per transaction,” NPCI said. For specific merchant categories, including railways, telecom services, insurance and fuel, a flat MDR of Rs 5 per transaction will apply to transactions above Rs 2,000, NPCI added. ET had reported on July 16 that the government would restore MDR on UPI transactions.
While NPCI has not specified a threshold based on the size of a merchant’s turnover, it clarified in its announcement that vendors operating under the person-to-person merchant (P2PM) category will “enjoy a mandatory zero MDR.” Merchants in this category typically small shopkeepers, street vendors and local businesses are classified as those receiving less than Rs 1 lakh per month in their accounts through UPI.
Brokerage firm Bernstein had earlier estimated that a 40-bps MDR applied to half of UPI merchant-payment value could create a Rs 22,000-crore revenue pool by 2027-28.
“The MDR is distributed only amongst the UPI ecosystem, to further invest into infrastructure resiliency, innovation, cybersecurity (protecting the UPI Infrastructure with banks and non-banks) and customer service,” NPCI said.
Image Alt Text:
UPI payment transaction on smartphone as NPCI announces new merchant discount rate
-
-
-
-
