Today is Bhaidooj and with this the festive season has ended. Now everyone’s eyes are on the new rules of UPI. From tomorrow, a shopkeeper may have to pay 0.4% Merchant Discount Rate (MDR) if he purchases more than ₹2,000 through UPI. Earlier NPCI was going to implement these new charges from October 15, but it was postponed due to festivals. NPCI had said that it will be implemented soon after Diwali, although the date has not been specified yet. 3 big things about the government’s MDR proposal… Understand with example how much money will be deducted. Why was the decision postponed till Diwali? During Diwali, huge sales of clothes, electronics, jewelery and accessories take place in markets across the country. In such a situation, digital payment increases. Business organizations and payment companies believed that implementing the new rule amid festivals could lead to disruption in payments at shops. Keeping this in mind, NPCI has extended this decision till Diwali. Businessmen had protested 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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Festive season is over, will there be a charge on UPI payment now: Shopkeeper will have to pay 0.4% MDR on payment of more than ₹ 2,000, date yet to be announced
