Srinagar, Sep 30: The proposed Unified Payments Interface (UPI) Merchant Discount Rate (MDR) framework is aimed at strengthening the digital payments ecosystem while protecting consumers and small merchants from additional costs, Kunal Kalawatia, Chief of Product and Marketing, National Payments Corporation of India (NPCI), said.
Kalawatia said UPI would continue to remain free for consumers, with MDR proposed only on eligible merchant transactions above Rs 2,000. Under the proposed framework, MDR would be levied at 0.4% per transaction, subject to a maximum charge of Rs 300.
Clarifying the Rs 2,000 threshold, he said it would apply to each merchant transaction and not to the total value of UPI payments received by a merchant during a day. Multiple transactions below Rs 2,000 would therefore remain MDR-free.
He said small businesses receiving up to Rs 1 lakh a month through UPI directly into their own bank accounts would continue to pay zero MDR. This, he said, would enable street vendors, local retailers and other small businesses to accept digital payments without additional costs.
For sectors including education, railways, telecom, insurance and fuel, transactions above Rs 2,000 would attract a flat MDR of Rs 5, keeping charges predictable.
Kalawatia said a dedicated fund would also be created from MDR collections to expand digital payment infrastructure and UPI acceptance among small merchants, particularly in smaller towns and cities.
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