When will the MDR charge be implemented on UPI, and who—from the general public to merchants—will get relief?
With Diwali now behind us, business owners across the country are awaiting a major update. The question on everyone’s mind is: when will the Merchant Discount Rate (MDR) for UPI payments come into effect? Let’s take a look at the latest updates regarding this.
**Implementation Date Postponed**
To avoid placing an additional financial burden on merchants and customers during the festive season, the National Payments Corporation of India (NPCI) had deferred the implementation, which was originally scheduled for October 15. Now that the festive season has largely concluded, there is keen interest in knowing when this rule will officially come into force.
**Who Will Be Affected?**
The good news is that the general public—the customers—have absolutely nothing to worry about. Peer-to-peer (P2P) transactions—sending money to one another—will remain completely free, just as they have always been. The UPI MDR will apply only to specific 'person-to-merchant' (P2M) transactions—that is, payments made to merchants.
**What Will the MDR Charges Be?**
According to NPCI guidelines, an MDR of 0.4% will be levied on eligible P2M UPI transactions exceeding ₹2,000. However, to protect merchants, a maximum cap has been set: for transactions of ₹75,000 or more, the fee will be capped at a maximum of ₹300.
**Special Exemptions for Certain Sectors**
The government and the NPCI have introduced concessional terms for specific types of businesses:
**Railways, Telecom, Insurance, and Fuel:** For businesses in these sectors, the percentage-based fee will not apply to payments exceeding ₹2,000. Instead, a fixed, concessional MDR of ₹5 per transaction will be charged. Capital Markets: A highly concessional rate of just 0.02 percent will apply to payments related to mutual funds, stock brokers, dealers, and securities (subject to a maximum cap of ₹300).
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