When will the MDR charge be applied to UPI payments? Take a look at the latest update from the NPCI.
UPI MDR Changes: When will the MDR charge be applied to UPI payments? Take a look at the latest update from the NPCI.
UPI MDR Changes: Will the UPI MDR charge apply to every digital payment? Find out which transactions might incur a fee and what merchants should keep in mind.
UPI MDR Changes: According to a notice issued by the National Payments Corporation of India (NPCI) on October 13, the Merchant Discount Rate (MDR) for select merchant transactions will now be implemented after Diwali. A specific date has yet to be announced, so no definitive date is provided in this notice. Merchants are advised to wait for an upcoming official circular before making any changes to their payment setup.
What is the Merchant Discount Rate (MDR), and who will it affect?
The Merchant Discount Rate (MDR) is essentially a fee structure applied when a merchant accepts an eligible payment.
What will change: This latest notice pertains only to specific Person-to-Merchant (P2M) transactions.
What will not change: Making a payment by scanning a shop’s QR code and sending money to a friend are two entirely different scenarios. This notice does not announce any new charges for both of these activities.
How will the fee be determined, and what will the cost be?
Merchants and customers might be wondering how this fee will be calculated and how much of an impact it will have on their pockets. Let’s break it down with some simple math:
| Transaction Amount |
Calculation at 0.4% Rate |
Applicable Rule / Cap |
|---|---|---|
| ₹5,000 |
₹20 |
Standard Calculation (Merchant Fee Applicable) |
| ₹10,000 |
₹40 |
Standard Calculation (Merchant Fee Applicable) |
| ₹1,00,000 |
₹400 |
Maximum Cap of ₹300 Applies |
These examples are provided solely to illustrate how the merchant fee structure might work; they do not imply that an additional charge will be levied on every customer. Furthermore, a merchant cannot determine the exact fee applicable to each payment received simply by looking at this percentage; one must also consider the rules regarding category eligibility and exemptions.
What should be the next steps for merchants and customers?
Since this decision has merely been deferred, it is essential that the subsequent process be made clear. To navigate this situation, the following points should be kept in mind:
Contacting the Acquiring Bank: Merchants should consult their bank or payment service provider to obtain comprehensive details—including the effective date, merchant-category eligibility, transaction limits, and a breakdown of settlement fees.
Caution for Customers: When making payments at a store, customers should carefully check for any charges displayed at the counter or on the payment screen.
Awaiting Further Orders: This deferral is essentially an update to the timeline; therefore, the upcoming circular—containing future guidelines—is the next key document that everyone should watch for.
