The implementation of Merchant Discount Rate (MDR) on above Rs 2,000 Person-to-Merchant (P2M) payments through Unified Payments Interface (UPI) will not come into effect from October 15, as the same was deferred for after Diwali, the National Payments Corporation of India (NPCI) said on Tuesday, October 13.
The UPI and Services Steering Committee acknowledged deferring the implementation of proposed 0.4 per cent MDR on certain person-to-business payments, keeping the festive season in mind, NPCI’s statement said.
However, the UPI’s governing body did not announce a specific date for implementation. The date will be announced later.
The Extension was Expected
The extension to the MDR implementation date was expected as various trade union have expressed their concerns considering the festive season. They argued that the 0.4 per cent MDR implementation could affect the D2C and B2B business. Meanwhile, many economists have earlier said that the move could bring back the use of cash.
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Govt Introduces MDR
Earlier last month, the government introduced o.4 per cent merchant discount rate (MDR) on Person-to-Merchant (P2M) transactions above Rs 2,000. However, it said that the fee will be shared among the facilitators, including banks and App providers, the government said.
"A nominal MDR of 0.4% will be levied on P2M transactions above Rs 2,000. This commission will be shared amongst the payment ecosystem partners, including banks and app providers," the Ministry of Finance said.
Additionally, for high-value transactions of Rs 75,000 and above, MDR will be capped at Rs 300 per transaction. Meanwhile, according to the government, person-to-person (P2P) transactions will not attract any charges irrespective of transaction value.
The new MDR rates were to come into effect from October 15; however, the same was deferred to a date after Diwali this year.