UPI’s new MDR pot: 5% of collections to be used for bringing small merchants online
NPCI will introduce a dedicated fund from MDR proceeds for small merchants. This fund aims to expand digital payment infrastructure in smaller Indian cities. Eligible small merchants receiving under Rs 1 lakh monthly will remain exempt. The new framework supports UPI's long-term sustainability and rural expansion efforts.
The National Payments Corporation of India (NPCI) has proposed a new fund that will use 5% of Merchant Discount Rate (MDR) collections to support small merchants and enhance digital payment infrastructure in smaller Indian cities. This proposal comes ahead of the introduction of MDR on selected UPI transactions starting October 15.
The fund's main objectives include aiding merchant onboarding, promoting higher UPI transaction volumes among existing small merchants, and strengthening digital payment infrastructure in Tier 3 to Tier 6 locations, including regions like the Northeast, Jammu & Kashmir, and Ladakh. The fund will also contribute to notified Central government schemes in these areas.
The proposal aligns with NPCI's aim to expand digital acceptance in smaller centers while safeguarding eligible small merchants from MDR charges.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
