Interim relief for merchants over UPI Fees

KOCHI: The National Payment Corporation of India (NPCI) has clarified that the implementation of the Merchant Discount Rate (MDR), which would impose additional costs on merchants accepting payments through UPI, will be implemented only after Diwali. It was earlier informed that MDR of 0.4 % would be charged to merchants on UPI transactions exceeding Rs 2,000 from October 15. The maximum charge per transaction is capped at Rs 300. A flat fee of Rs 5 will also apply in certain sectors. The date for implementing the additional fee will be informed later. The action is to ensure that business during the festive-season is not affected.

The MDR will not be applicable to all UPI transactions. Money transactions between people and merchant transactions of up to Rs 2,000 will continue to be free. Existing exemptions for small merchants will also remain in place. The MDR will be levied only on dealers in specified sectors. The central government has clarified that the UPI fee must not be collected from consumers.

Additional liability for dealers (0.4%)
Transaction Amount: Dealers Cost
Rs 2,500: Rs 10
Rs 5,000: Rs 20
Rs 10,000: Rs 40
Rs 25,000: Rs 100
Rs 50,000: Rs 200
Rs 75,000: Rs 300

Areas likely to be affected
Gold and silver traders
Hotels and restaurants
Supermarkets and grocery stores
Clothing retailers
Other establishments that accept digital payments

Why is fee being introduced?
In September, a total of 2,407 crore UPI transactions were recorded across India, with a total value of approximately Rs 29.37 lakh crore. The government explained that the fee revenue will be utilized to develop the technical infrastructure, cyber security, and services of this extensive transaction system. Banks, payment service providers, and apps will share the revenue.