Discover how the new UPI framework, effective October 15, will impact large-value merchant transactions, introducing a 0.4% MDR to bolster digital payment sustainability and innovation while protecting small businesses.
IMAGE: Illustration: Dominic Xavier/Rediff.com
Key Points
- New UPI framework introduces 0.4% MDR on P2M transactions above Rs 2,000 from October 15.
- MDR charges are paid by merchants, not consumers, and capped at Rs 300 for transactions over Rs 75,000.
- Payments between individuals and most everyday merchant transactions remain free.
- The framework aims to strengthen UPI sustainability, support innovation, and mitigate fraud.
- Small merchants with monthly turnover under Rs 1 Lakh are exempt from MDR, protecting micro and small businesses.
The new UPI framework for large-value merchant transactions will strengthen UPI sustainability, support innovation, mitigate fraud and enhance wider acceptance, industry chamber Assocham said on Thursday.
From October 15, a 0.4 per cent MDR will apply to person-to-merchant UPI payments above Rs 2,000. The charge will be paid by merchants, not consumers, and will be capped at Rs 300 for transactions of Rs 75,000 or more. Payments between individuals, as well as the vast majority of everyday merchant payments, will remain free.
Boosting UPI Sustainability And Innovation
Assocham President Nirmal K Minda stated that he “appreciates the new UPI framework for large value merchant transactions. It will strengthen UPI sustainability, support innovation, mitigate frauds and enhance wider acceptance”. The framework will support payment infrastructure and acceptance networks enabling UPI to expand further and serve consumers and businesses across the country, he said.
Protecting Small Businesses From MDR
The framework provides continued zero MDR support to eligible small merchants and this will help protect micro and small businesses from additional payment costs, he said. In India, there are more than 3 crore Micro units that will not face any MDR charges for UPI transactions as their monthly turnover is less than 1 Lakh, the chamber said.
Importantly, around 96 per cent of merchant transactions will remain unaffected, with MDR applying to only about 4 per cent of P2M transactions, it said, adding that this will ensure that the vast majority of everyday merchant payments continue without any MDR impact. “By creating a sustainable revenue mechanism while protecting consumers and small merchants, the framework can support greater investment in innovation, infrastructure and payment acceptance. This will further strengthen UPI’s role in driving India’s digital transformation,” Minda said.
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