UPI MDR rollout: what businesses need to check
What changed
NPCI was reported likely to postpone implementation of the Unified Payments Interface (UPI) merchant discount rate (MDR) after a UPI Steering Committee meeting scheduled for October 9, with an announcement expected around 1 pm to 2 pm.
On September 15, the government announced a 0.4% MDR on UPI merchant transactions above Rs 2,000. Implementation was initially scheduled for October 15.
The development came after merchant bodies, fintech companies and payments firms asked NPCI to postpone implementation. They raised concerns about consumer sentiment during festival sales and varying MDR rates.
Who it affects
Trade associations argued that the charge would eat into already thin profit margins, particularly for small retailers, distributors and businesses handling high-value transactions.
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The Chamber of Trade and Industry, which urged Finance Minister Nirmala Sitharaman to withdraw the levy, estimated that transactions above Rs 2,000 could fall by as much as 50%.
Traders feared merchants could stop accepting UPI for larger purchases, encourage cash payments or indirectly pass the additional cost to customers. They also argued that businesses should not be penalised for adopting digital payments after years of government efforts to promote a cashless economy.
The final notification describes interoperable digital payment systems for business-to-business trade and customs within the India-Gulf corridor, including seamless business-to-government and business-to-business transactions and real-time customs, tax and fee settlements.
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