Such deferment would keep UPI payments free for merchants through the festival season, which runs until Christmas, amid pushback from retail traders’ associations. The MDR is expected to take effect only after the festival period, sources said.
Members of the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), met on Wednesday to discuss the timing of the MDR and other clarifications. Retail traders’ associations had called for a “No UPI Day” on October 2 to protest the proposed fee, but they withdrew the protest after meeting Union Finance Minister Nirmala Sitharaman last month.
“The UPI Steering Committee met today to discuss certain clarifications. After Christmas when the festival season gets over, the MDR on UPI is expected to be introduced, which is January 1, and the fees is likely to be implemented across applicable categories across the industry,” a person familiar with the discussions said.
The exemption for transactions of up to ₹2,000 will stay as decided earlier, the person said.
An email sent to NPCI did not elicit a response until press time.The committee is also considering exempting businesses with annual turnover of up to ₹40 lakh from MDR. That would significantly expand the exemption from the existing framework, under which businesses with monthly turnover of up to ₹1 lakh were to be spared the fee.
An MDR is a fee paid by a merchant to the bank and payment company processing a digital transaction.
“Retail associations had planned a ‘No UPI Day’ on October 2 but they later withdrew from it. They demanded withdrawal of MDR on UPI transactions, but the Finance Ministry was not of the same view. So, MDR is likely to come after festivals. Small merchants will be classified as those under ₹40 lakh annual turnover, so that they don’t have to pay any MDR,” the person said.
Separately, authorities are considering raising the daily UPI transaction limit for certain categories to ₹2 lakh from ₹1 lakh.
Consumers will not have to pay any MDR on UPI transactions.
As announced earlier, a 0.40 per cent MDR would apply to merchant transactions above ₹2,000, also known as peer-to-merchant (P2M) transactions, subject to a cap of ₹300. Certain categories, including bill payments, utilities, education and fuel, would attract a flat fee of ₹5 per transaction above ₹2,000.
UPI recorded a record average of 802 million transactions a day in September, with average daily transaction value of ₹97,913 crore.
Transaction volume rose 22.6 per cent from a year earlier to 24.07 billion in September, from 19.63 billion a year earlier. The total value of transactions increased 18 per cent to ₹29.37 trillion from ₹24.89 trillion.
On a month-on-month basis, transaction volume fell 1.8 per cent from 24.51 billion in August, partly because September had 30 days compared with 31 in August. Transaction value declined 1.5 per cent to ₹29.37 trillion from ₹29.82 trillion.
