Controversial UPI MDR Faces Delay
The National Payments Corporation of India (NPCI) is reportedly set to postpone the implementation of the Unified Payments Interface (UPI) Merchant Discount Rate (MDR). An official announcement regarding the deferment is expected on Friday, October 9th, following a crucial meeting of the UPI Steering Committee.
The controversial 0.4% MDR, applicable to UPI merchant transactions exceeding Rs 2,000, was initially announced by the government on September 15th and scheduled for implementation on October 15th.
Merchant Outcry Leads to Review
The decision to review the MDR comes after significant pressure from various merchant bodies, fintech companies, and payment firms. These groups had urged the NPCI to delay the rollout, citing concerns over potential negative impacts on consumer sentiment during the festive sales season and the burden of varying MDR rates on businesses.
Traders and merchant associations were particularly vocal in their criticism, arguing that even a small charge on UPI payments above Rs 2,000 would significantly erode their already thin profit margins, especially for small retailers and businesses handling high-value transactions.
Concerns were raised that merchants might stop accepting UPI for larger purchases, encourage customers to pay in cash, or eventually pass the additional costs on to consumers. The Chamber of Trade and Industry (CTI), for instance, estimated that transactions above Rs 2,000 could see a decline of up to 50% if the levy proceeded.
Steering Committee to Convene
The UPI Steering Committee has been convened to meet on Friday, October 9th, to deliberate on the proposed deferment of the MDR. Sources indicate that the committee's meeting is slated for the first half of the day, with an announcement on its decision anticipated around 1-2 PM IST.