The National Payments Corporation of India on Tuesday deferred the rollout of a 0.4 per cent Merchant Discount Rate on select UPI transactions, giving merchants relief just ahead of the festive season. The charge, which was to take effect from October 15, will now be implemented immediately after Diwali on a date to be notified separately.
The UPI and Services Steering Committee took the decision keeping the festive season in mind, NPCI said in a statement. The levy was proposed in a circular issued last month and would apply to person-to-merchant payments above Rs 2,000. It is the merchant — not the consumer — who pays the charge, and it is capped at Rs 300 for transactions of Rs 75,000 or more.
What stays free, what will cost more
Payments between individuals, as well as the vast majority of everyday merchant payments, will remain free. Essential services such as railways, telecom, fuel and insurance were to attract a flat Rs 5 fee per transaction above Rs 2,000, while capital market transactions in mutual funds and stockbroking were to be charged a lower 0.02 per cent rate, also capped at Rs 300.
NPCI, which operates the UPI platform, had said the fee was aimed at creating a sustainable revenue framework for the digital payments ecosystem. Of the amount collected, 40 per cent would go to customers' banks, 30 per cent to payment gateways, 20 per cent to the UPI app and the remaining 10 per cent to the sponsoring bank of the UPI app.
Traders welcome the breather
The deferral came after sustained opposition from trader bodies and criticism from the Opposition, which had termed the levy a tax and warned it would burden consumers. The Confederation of All India Traders called the decision "timely and pragmatic", noting that millions of traders and MSMEs depend on higher business volumes during the festive and wedding season.
The decision follows a meeting held on September 30, when a delegation of around 20 trade leaders met Finance Minister Nirmala Sitharaman to highlight the implications of the proposed charge. Retailers' bodies said the deferral would help stores avoid reconfiguring billing systems and briefing staff at the peak of festival footfall.
Sources:
NPCI defers 0.4% MDR on UPI transactions above Rs 2,000 until after Diwali — The New Indian Express
The UPI and Services Steering Committee took the decision keeping the festive season in mind, NPCI said in a statement. The levy was proposed in a circular issued last month and would apply to person-to-merchant payments above Rs 2,000. It is the merchant — not the consumer — who pays the charge, and it is capped at Rs 300 for transactions of Rs 75,000 or more.
What stays free, what will cost more
Payments between individuals, as well as the vast majority of everyday merchant payments, will remain free. Essential services such as railways, telecom, fuel and insurance were to attract a flat Rs 5 fee per transaction above Rs 2,000, while capital market transactions in mutual funds and stockbroking were to be charged a lower 0.02 per cent rate, also capped at Rs 300.
NPCI, which operates the UPI platform, had said the fee was aimed at creating a sustainable revenue framework for the digital payments ecosystem. Of the amount collected, 40 per cent would go to customers' banks, 30 per cent to payment gateways, 20 per cent to the UPI app and the remaining 10 per cent to the sponsoring bank of the UPI app.
Traders welcome the breather
The deferral came after sustained opposition from trader bodies and criticism from the Opposition, which had termed the levy a tax and warned it would burden consumers. The Confederation of All India Traders called the decision "timely and pragmatic", noting that millions of traders and MSMEs depend on higher business volumes during the festive and wedding season.
The decision follows a meeting held on September 30, when a delegation of around 20 trade leaders met Finance Minister Nirmala Sitharaman to highlight the implications of the proposed charge. Retailers' bodies said the deferral would help stores avoid reconfiguring billing systems and briefing staff at the peak of festival footfall.
Sources:
NPCI defers 0.4% MDR on UPI transactions above Rs 2,000 until after Diwali — The New Indian Express
