UPI MDR Hike: Merchants to Pay 0.4% on Transactions Over ₹2,000 from Oct 15
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Digital payment sustainability vs financial inclusion: a GS3 Economy and Digital Infrastructure case study.
Why in news
NPCI announced that the government will introduce a Merchant Discount Rate (MDR) on specific P2M UPI transactions starting October 15 to ensure digital payment sustainability.
Background
Merchants will pay a 0.4% MDR on UPI transactions exceeding ₹2,000, capped at a maximum fee of ₹300 for payments over ₹75,000. Small merchants with monthly receipts up to ₹1 lakh remain exempt from these charges.
Facts for Prelims
- FactMDR of 0.4% applies to P2M UPI transactions above ₹2,000
- FactMaximum fee cap of ₹300 for payments exceeding ₹75,000
- FactExemption for small merchants receiving up to ₹1 lakh monthly
- BodyNPCI (National Payments Corporation of India) announced the move with RBI backing
Prelims practice question
What is the maximum fee cap for UPI transactions exceeding ₹75,000 under the new MDR rules?
- (a)₹500
- (b)₹100
- (c)₹1,000
- (d)₹300
Show answer
Answer: (d) ₹300 — The note states that the fee is capped at a maximum of ₹300 for payments over ₹75,000.
For Mains
Q. Discuss how the introduction of Merchant Discount Rates (MDR) on UPI transactions balances the sustainability of digital payment infrastructure with the ease of doing business for small merchants.
Dimensions to cover in your answer
- Sustainability vs. Accessibility: Balancing the cost of maintaining digital rails with the zero-cost ecosystem for consumers
- MSME Protection: Ensuring the ₹1 lakh exemption threshold effectively shields micro-merchants from transaction costs
- Revenue Model Shift: Transitioning from a zero-fee model to a sustainable fee structure for payment aggregators and banks
Keywords: Digital Public Infrastructure · Payment Sustainability · Merchant Discount Rate · Financial Inclusion · Transaction Costs
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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.