UPI’s new MDR pot gets a small merchants twist

The National Payments Corporation of India (NPCI) has proposed a dedicated fund financed from Merchant Discount Rate (MDR) collections to support small merchants and expand digital payment infrastructure in smaller cities across India. This initiative aims to onboard more small merchants onto UPI, encourage higher transaction volumes, and build digital payment infrastructure in Tier 3 to Tier 6 locations, including the Northeast, Jammu & Kashmir, and Ladakh.

The proposal is part of the broader MDR scheme that will come into effect from October 15, with a 0.4% MDR on select person-to-merchant (P2M) UPI transactions above Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above.

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