Kolkata: The proposed Merchant Discount Rate (MDR) on certain Unified Payments Interface (UPI) transactions may not be introduced on October 15 as originally planned. According to reports, the implementation could be postponed until January 1, 2027.
If the rollout is deferred, UPI transactions made during the festive shopping season would remain outside the proposed MDR framework. A final decision on the implementation timeline is expected in the next few days.
Higher Turnover Exemption May Be Considered
The UPI and Services Steering Committee is reportedly considering an increase in the turnover limit for businesses that would be exempt from MDR.
Under the rules announced so far, businesses with a monthly turnover of up to Rs 1 lakh would not be required to pay MDR. Reports suggest that the committee is now considering an annual turnover exemption limit of up to Rs 40 lakh.
If approved, the higher threshold would substantially increase the number of businesses eligible for exemption from the proposed charge.
Traders Oppose Proposed UPI MDR
The proposed MDR has faced opposition from several retail trader and business associations. A major concern among merchants is that they would have to bear the cost themselves, as the charge cannot be passed on to customers.
The proposed rate is 0.4% of the transaction value for eligible UPI transactions above Rs 2,000.
Retail trader associations had announced plans to observe a ‘No UPI Day’ on October 2 as a protest against the proposed MDR. However, the protest call was later withdrawn following a meeting with Union Finance Minister Nirmala Sitharaman in September.
UPI Transactions Rise Sharply
UPI continued to record strong transaction activity in September. The payment system processed an average of 80.2 crore transactions per day during the month.
The total number of transactions increased 22.6% year-on-year to 24.07 billion, while the total transaction value rose 18% to Rs 29.37 lakh crore.
The proposed MDR structure also provides different charges for certain sectors that generate high transaction volumes and values.
Railways, Telecom and Capital Markets to Have Different Rates
For sectors such as railways, telecom, fuel and insurance, the proposed charge would be Rs 5 per transaction above Rs 2,000 instead of 0.4% of the transaction value.
Capital market transactions, including mutual fund investments and stockbroking payments, would attract a lower MDR of 0.02%. This charge would be capped at Rs 300.
The final decision on the MDR implementation date and the proposed exemption threshold is expected to be announced in the coming days.
Disclaimer: This article is for informational purposes only. The information about UPI MDR, exemption limits and proposed implementation dates is based on reports and may change after the final decision by the concerned authorities. Users and merchants should verify the latest official guidelines before making any financial or business decisions.