With a new Merchant Discount Rate (MDR) set to apply to certain UPI transactions from October 15, questions have emerged over whether consumers will have to pay additional charges when making digital payments. Here’s all you need to know
Will UPI apps charge a platform fee on payments?
No, UPI app providers will not charge a platform fee or any other charge for payments made through the Unified Payments Interface (UPI). UPI applications are explicitly restricted from levying platform fees on UPI transactions.
The clarification comes as the government has allowed the charging of MDR on certain merchant transactions. Effective October 15, UPI payments to merchants (P2M) above ₹2,000 will attract an MDR of 0.4%, subject to an overall cap of ₹300.
However, merchants accepting UPI payments cannot pass on these charges to customers. Punjab & Sind Bank MD and CEO Swarup Kumar Saha told PTI that consumers will continue to pay only the price displayed by the merchant, even after October 15.
“Merchants onboarded cannot pass on MDR charges to customers while accepting payments through UPI. The framework ensures consumers pay only the posted price,” Saha said.
UPI MDR will not impact UPI MDR: Sanjay Malhotra
Reserve Bank of India Governor Sanjay Malhotra on Wednesday said levying a “small fee” in the form of MDR will not have a “major impact” on UPI transaction volumes.
“As of now, we do not see any drop in volumes. And I don’t personally think that a small fee will have a major impact on the volumes,” he told reporters at the central bank headquarters here.
UPI transaction volumes decline by 1.8% in September
Unified payments interface (UPI) transactions declined by 1.8 per cent in September compared to that in August, data released by the Reserve Bank on Thursday said.
The UPI system operated by the National Payments Corporation of India (NPCI) witnessed 2,407 crore transactions in September as against 2,450 crore transactions a month ago.
The overall value of the transactions on the platform also declined by 1.50 per cent to ₹29.37 lakh crore in September from ₹29.82 lakh crore in August, the data showed.
The figures come a fortnight ahead of the implementation of the new merchant discount rate (MDR) fee on high-value UPI payments for merchants.
Industry watchers attributed the decline to the fact that August has 31 days versus 30 in September, and pointed out that the average transactions per day were higher in September at 802 million versus August’s 791 million.