The National Payments Corporation of India (NPCI) announced a 0.4% merchant discount rate (MDR) on Unified Payments Interface transactions for person-to-merchant payments above 2,000 starting October 15, keeping small-ticket transactions outside its remit.
There will be no charge on peer-to-peer payments. The average merchant payment was 577 in August, indicating most transactions will not face this charge.
UPI payments are currently free. The levy, being reintroduced after six years, meets the long-standing demand of the digital payments industry to help ensure financial viability.
“For transactions of 75,000 and above, MDR will be capped at 300 per transaction,” NPCI said. For specific merchant categories, including railways, telecom services, insurance and fuel, a flat MDR of 5 per transaction will apply to payments above 2,000, it added.
The development will benefit stakeholders such as banks and third-party payment operators including Walmart-owned PhonePe, Google Pay, Paytm, Navi, Cred, Amazon Pay, Flipkart’s Super Money and others.
ET was first to report on July 16 that the government would restore MDR on UPI transactions. Subsequently, on September 11, ET reported that the rate will be fixed at 40 basis points, or 0.4%.
