In a major relief to merchant UPI users, NPCI deferred the date for implementation of 0.4 per cent merchant discount rates (MDR) from October 15 to a date after Diwali. Meanwhile, you might be thinking: what could be the best payment method among UPI, credit card, and debit card for digital and retail on-store payment this festive season to avoid additional charges?
UPI vs Debit vs Credit Card
Earlier, when the MDA rate was announced, it was speculated that people would return to credit and debit cards for higher payments. However, the National Payments Corporation of India (NPCI) issued a rate calculation, stating that UPI will remain cheaper compared to debit or credit cards even if MDR charges are applied.
Payment Method Vs Estimated Merchant Charge
Payment Method | Estimated Merchant Charge |
UPI | 0.4% (up to a maximum of Rs 300) |
Debit Card | Up to 0.90 per cent |
Credit Card | Around 2 per cent on average |
According to NPCI, a merchant payment of Rs 10,000 is 80% cheaper compared to a credit card. The MDR calculation is as follows:
- Credit Card (2 per cent): Around Rs 200 charge
- Debit Card (0.9 per cent): Around Rs 90 charge
- UPI (0.4 per cent): Only Rs 40 charge
Which is cheaper in the festive season
As proposed, 0.4 per cent MDR is not there. Paying with UPI is the most feasible option to save money this festive season. However, if you do online shopping, credit cards and debit cards can have lucrative offers for you. If you are paying to stores in markets, then UPI is the best method for festive buying.
Which transactions will not be charged?
The 0.4 per cent MDR will have less impact on the everyday transactions of the general public. All P2M transactions up to Rs 2000 will remain completely free. Meanwhile, for small merchants, such as street vendors or tea stall operators, no charge will apply to earnings up to Rs 1 lakh. This means if a small merchant receives Rs 1 lakh or less per month via UPI, no charges will be levied, even if individual payments over Rs 2000 were made to that UPI.