Stories
Fin Min to Meet Traders Over UPI MDR Fears; IBA Ensures Consumers Spared Charges
- •Finance Minister Nirmala Sitharaman will meet Confederation of All India Traders (CAIT) to address concerns about the merchant discount rate (MDR) on UPI transactions.
- •The finance ministry will also engage with the Indian Banks’ Association (IBA) to prevent MDR on UPI from being passed on to consumers.
- •CAIT Secretary General Praveen Khandelwal suggests deferring MDR implementation to allow for stakeholder engagement and explanation.
- •Starting October 15, UPI transactions exceeding Rs 2,000 will incur a 0.4 percent MDR, plus an 18 percent GST on the MDR fee.
- •Government sources indicate that 96% of UPI merchant payments will remain unaffected, as most transactions are below Rs 2,000, and small merchants receiving up to Rs 1 lakh monthly via UPI will have nil MDR.
Key Questions Answered
Starting October 15, UPI transactions above Rs 2,000 will attract a merchant discount rate (MDR) of 0.4 percent, while transactions below that amount remain unaffected. Around 96 percent of all UPI merchant payments will stay completely free, and small merchants receiving up to Rs 1 lakh monthly through UPI QR codes will incur nil MDR.
Small businesses and traders fear that the imposition of MDR will squeeze their profit margins and increase operating costs. Furthermore, small businesses unregistered with GST authorities may face revenue impacts because they lack a window to claim input tax credit on the 18 percent GST levied on MDR fees.
Finance Minister Nirmala Sitharaman is scheduled to meet representatives from the Confederation of All India Traders (CAIT) to discuss and address their concerns regarding the new merchant discount rate. Additionally, the finance ministry will hold talks with the Indian Banks' Association (IBA) to establish mechanisms ensuring these charges are not passed on to consumers.
