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Remember when we said UPI might not be free anymore? Well, there’s a change of plans.
NPCI has postponed the rollout of charges on select UPI payments made to businesses until after Diwali, expected in the second week of November.
The charges were supposed to start on October 15, but NPCI, which runs UPI, says it needs more time to work out the details. The new date is yet to be announced.
First, what is MDR? MDR or Merchants Discount Rate is a fee businesses pay to process digital payments. Under the proposed plan, select UPI payments above ₹2,000 would carry a 0.4% fee. That means ₹8 on a ₹2,000 payment or ₹40 on ₹10,000.
Why the delay: merchant groups, fintechs and payment companies have raised concerns about adding these charges just before the festive shopping rush. They want clarity on which payments will be charged and how much businesses will have to pay.
The government is also worried that businesses could pass these extra costs on to customers when prices are already rising.
Why is everyone pushing back: UPI is accepted by around 100 million merchants across India, including small shops in towns and villages. Many fear that charging for UPI could make everyday digital payments more expensive. They are calling for lower fees or a flat rate instead.
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