MDR charge on UPI payment has been postponed till Diwali. It was earlier to be implemented from October 15. In this, the shopkeeper was to be charged 0.4% for making UPI payment of more than ₹ 2,000. Transactions among common people will remain free as before. NPCI has decided to postpone it in view of the festive season. NPCI has said that it will be installed soon after Diwali, but has not yet given the date. 3 big things about the government’s MDR proposal.. There was protest across the country. This decision of the government was opposed by businessmen and opposition leaders across the country. The protest took place at two levels. Opposition leaders raised questions about the political and public impact, while business organizations feared increased costs and burden on customers. He said that this will cause more loss to small businessmen. What is merchant discount rate? Merchant Discount Rate i.e. MDR is the fee that a merchant or shopkeeper pays to banks and payment service providers in exchange for using debit/credit card or digital payment (UPI) facility i.e. point of sale machine or payment gateway. This fee is taken to meet the costs of running the digital infrastructure and transfer network properly. This charge has to be paid by the merchant, not by the customer. Merchant transactions above ₹2,000 constitute less than 5% of the total UPI payments to merchants. Payments above ₹2,000 count for less than 5%. But in terms of value this figure becomes very big. About 67% of the total money comes from these big payments. This works out to around ₹6 lakh crore every month. This amount is approximately 20% of the value of total UPI transactions across the country. That is, even though big transactions may be less in number, they constitute a major part of the money circulating in the market. Impact of UPI MDR Charge on Merchants The government had started the UPI incentive scheme in 2021. The government had started the incentive scheme from 2021-22 to promote UPI and keep it free. Under this, 0.15% incentive was given on UPI payments up to ₹ 2,000 made from customers to small shopkeepers. An incentive of ₹8,276 crore was given on this till 2024-25. There were about 55.5 crore UPI users in the country by June 2026.
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0.4% charge on UPI postponed till Diwali: MDR charge was to be imposed from October 15 on payments of more than Rs 2 thousand; Decision in view of the festive season
