Kolkata: Will the introduction of merchant discount rate (MDR) in Unified Payments Interface (UPI) that is supposed to kick in on October 15, be deferred?
The introduction of MDR on UPI transactions may be postponed to January 1, 2027. state reports. If this charge is postponed it would take the festive spending out of its purview. The final decision will be taken in the next few days.
Higher turnover floor being considered
According to media reports, the UPI and Services Steering Committee is considering whether it can exempt businesses with an annual turnover of up to Rs 40 lakh from paying MDR. According to the rules announced only those businesses which have a turnover of up to Rs 1 lakh a month won’t have to pay MDR. If the new floor is fixed, it will raise the exemption limit significantly.
Retail traders opposed to MDR
There is already a lot of opposition from traders and businessmen who have opposed MDR. One of the key reasons is that the government has said that they cannot pass on the charge to the end customers and the merchants have to bear it themselves. The rate is 0.4% of the value of the transactions above Rs 2,000.
In fact, retail traders associations planned a ‘No UPI Day’ on October 2 to protest against MDR. Eventually the boycott call was withdrawn after a meeting with Union Finance Minister Nirmala Sitharaman in September.
UPI usage in September
In September, UPI recorded an average of 80.2 crore transactions per day. The volume of transaction went up 22.6% YoY to reach 24.07 billion. On the other hand, transaction value surged 18% to reach Rs 29.37 lakh crore.
MDR in railways, telecom etc
Sectors that record high volume and value of transaction such as railways, telecom, fuel and insurance will pay Rs 5 per transaction above Rs 2,000 and not 0.4% of the transaction value. Capital market transactions, such as mutual fund investments and stockbroking payments, will attract a lower MDR of 0.02% also capped at Rs 300.
