Stories
Fintech Platforms Set to Retain Platform and Convenience Fees Despite NPCI UPI MDR Directive
- •Fintech platforms are unlikely to drop platform, handling, or convenience fees charged to customers and merchants, despite the NPCI directive aiming to prevent the new UPI MDR from being passed on.
- •Payment firms argue that platform and technology fees are separate from payment processing costs and cover checkout infrastructure, digital services, and platform operations.
- •The NPCI has fixed a 0.4 percent MDR for digital transactions above Rs 2,000 starting October 15, creating new costs for certain payment transactions.
- •While the government and finance ministry monitor the situation to protect consumers from recovering payment charges, fintechs face rising pressure to monetise their services and pursue profitability.
Key Questions Answered
Fintech platforms are unlikely to eliminate the various fees they charge customers or merchants under different names, such as platform, handling, convenience, or technology fees, despite the NPCI directive designed to stop the new UPI MDR from being passed on to customers_. While some companies may choose to waive convenience fees for UPI payments, platform fees intended to cover infrastructure, checkout technology, and other non-payment services are expected to remain intact_.
Industry executives distinguish a convenience fee as a charge specifically for using a particular payment method, whereas a platform fee covers the operational costs of providing the digital service, platform, and technology infrastructure separate from the actual payment transaction cost_.
The NPCI has established a fixed MDR of 0.4 percent for digital transactions exceeding Rs 2,000, scheduled to take effect starting October 15_.
