Amid opposition demands to roll back the 0.4 per cent Merchant Discount Rate (MDR) on select UPI payments, government sources on Thursday said the decision followed due consideration, and the government will closely monitor implementation to ensure merchants do not pass the charges on to consumers. “Efforts will be made to plug gaps in enforcement. Govt has held discussions with payment aggregators. Govt will closely monitor effective implementation to ensure that merchants do not pass on the charges to consumers,” sources were quoted as saying by news agency ANI.
Sources also said the decision to impose the 0.02 per cent MDR charge in the stock market came after discussions with SEBI, stock exchanges and stakeholders.
No US pressure in UPI MDR decision
The sources reiterated that the government is not under any pressure to levy a 0.4 per cent MDR on select UPI payments and said that Goods and Services Tax (GST) on UPI is a false rumour.
“It will be set off in Input tax credit. If there is any issue, the GST Council will look into it. We don’t see much increase in cash transactions due to MDR. We are confident that there will be no increase in cash transactions. Don’t expect UPI transactions to fall after the rollout on 15th October,” the sources said.
NPCI promoting RuPay debit cards
The National Payments Corporation of India (NPCI), which operates the UPI platform, issued a circular on September 15 providing for MDR on certain UPI transactions, aimed at creating a sustainable revenue framework for the digital payments ecosystem.
Sources said NPCI is constantly promoting RuPay debit cards and the use of RuPay debit cards has been kept free from MDR. “RuPay cards will have an edge over other cards,” they said.
What are the charges?
From October 15, a 0.4 per cent MDR will apply to person-to-merchant UPI payments above Rs 2,000. Merchants, not consumers, will pay the charge, capped at Rs 300 for transactions of Rs 75,000 or more. Payments between individuals, as well as the vast majority of everyday merchant payments, will remain free. Essential services – railways, telecom, fuel and insurance – get a flat Rs 5 fee per transaction above Rs 2,000.
Capital markets transactions (mutual funds, stockbroking) get a lower 0.02 per cent rate, also capped at Rs 300.
Small merchants collecting up to Rs 1 lakh a month via UPI QR codes remain fully exempt from any new charge – a carve-out, officials say, shields about 96 per cent of all merchant transactions.
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