The record
Written from the 1 report below. Nothing here is unsourced.
- The government is introducing a 0.4 percent Merchant Discount Rate fee on UPI payments above 2,000 rupees, effective from mid-October as per NPCI guidelines.
- Merchants accepting such payments will bear the fee, similar to the charge structure that already exists for credit cards.
- The collected fee will be shared among four parties: the customer's bank gets 40 percent, the merchant's bank 30 percent, the payment app 20 percent, and the partner bank 10 percent.
- For example, a 10,000 rupee payment would attract a 40 rupee fee, split as 16 rupees to the customer's bank, 12 to the merchant's bank, 8 to the payment app, and 4 to the partner bank.
- Apps like Paytm stand to gain significantly, since payments made through a Paytm QR code can route up to half of the fee to Paytm, making the move important for the payments industry.
What to watch next
- Whether customers end up bearing any part of the MDR cost through higher prices
- How smaller merchants and payment apps adjust to the new fee structure after October 16
- Further clarity from NPCI or the government on which transactions remain free
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Indian-language1
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Named India · Axis Bank · Google Pay · HDFC Bank · Paytm · PhonePe · State Bank of India · Yes Bank · Government of India · National Payments Corporation of India
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