Indian banks will monitor merchants to ensure that the Merchant Discount Rate (MDR) on UPI transactions will not be passed on to consumers. The Finance Ministry will hold meeting with Indian Banks’ Association (IBA), Confederation of All India Traders (CAIT) on MDR issue. The IBA will make a mechanism and make sure that MDR on UPI is not passed on to consumers, reported news agency ANI.ย
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,ย 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.
Details on UPI MDR transactionsย
Special rate for essential sectors: Transactions above Rs 2,000 involving sectors such as Railways, telecom, insurance, fuel and agricultural inputs will attract a flat MDR of Rs 5 per transaction. These sectors account for nearly 17 per cent of UPI P2M transactions by volume and around 46 per cent by value.
Charges on stock investments: Payments related to mutual funds, securities, stock brokers and dealers will attract an MDR of 0.02 per cent, capped at Rs 300 per transaction.
For Small vendors: Small merchants receiving up to Rs 1 lakh per month through UPI QR codes under the Person-to-Person-Merchant (P2PM) category will continue to enjoy mandatory zero MDR on all transactions.
No platform or hidden fees: UPI app providers will not be allowed to impose platform fees or hidden charges. Banks have also been advised to ensure that merchants do not pass MDR costs on to customers making UPI payments.ย
No monthly limits on free UPI transactions: Individuals will not face monthly quotas, volume limits or tiered caps on free UPI transactions.ย
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