Ministry of Finnace to engage with banks and traders to allay Merchant Discount Rate concerns
In an effort to shield consumers from additional Merchant Discount Rate (MDR) charges, the finance ministry is set to consult with the Indian Banks Association. Meetings with traders' organizations are also scheduled to directly address their concerns about the recent MDR levy. Effective from October 15, transactions exceeding ₹2,000 will incur a 0.
The finance ministry of India is set to engage with banks and traders to address concerns about Merchant Discount Rate (MDR) charges, according to officials. The Ministry will communicate with the Indian Banks Association (IBA) to ensure that MDR charges are not transferred to consumers, and also plan to meet with trader bodies to alleviate their apprehensions.
The official clarified that the move to introduce MDR on Unified Payment Interface (UPI) aligns with a recommendation from a parliamentary panel, which included opposition members. They emphasized that the fears of consumers returning to cash due to merchant fees on UPI are unfounded.
The government is considering a 18% tax on MDR UPI transactions exceeding Rs 2,000, with the National Payments Corporation of India (NPCI) having already implemented a 0.4% MDR on person-to-merchant UPI transactions above Rs 2,000, effective October 15. This rate is capped at ₹300 for transactions of Rs 75,000 or more. Merchants with monthly UPI collections under Rs 1 lakh are exempt from the MDR.
The government underscores that MDR is not a tax or a cess, but a charge shared among banks and other entities within the UPI ecosystem. No funds will be received by the government from this levy. The official also mentioned several exemptions provided to small merchants or traders, including a transaction cap of ₹2,000 and exclusion of person-to-person transactions.
The IBA is set to roll out an awareness campaign to dispel misconceptions about MDR, which is already applicable to card-based transactions like Mastercard, Visa, or American Express. The government has also exempted RuPay debit transactions from MDR.
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.
