The implementation of merchant discount rate (MDR) charges on Unified Payments Interface (UPI) transactions remains uncertain after a scheduled meeting of the UPI Steering Committee did not take place on Oct 9.
According to a report by Moneycontrol, the meeting, which was expected to discuss the proposed charges, was not held.
The National Payments Corporation of India (NPCI), which operates UPI, has not announced a revised meeting date or confirmed whether the proposed Oct 15 implementation will proceed.
Rollout faces uncertainty
The UPI Steering Committee comprises representatives from major payment applications, banks and financial technology companies.
In September, the committee reportedly decided to introduce an MDR of 0.4%, equivalent to 40 basis points, on transactions exceeding Rs2,000.
MDR is a processing fee charged to merchants accepting digital payments.
At the proposed rate, a transaction of Rs10,000 would attract a fee of Rs40. NPCI was examining proposals to defer implementation until January 2027.
Although the payments body subsequently held discussions with industry representatives, no final decision on postponement had been announced. Several industry executives reportedly supported retaining the original Oct 15 rollout schedule.
Merchants raise concerns
Merchant associations, fintech firms and payment companies have requested more time before the proposed charges take effect.
Their concerns include potential disruption to festive-season sales, uncertainty over applicable transaction categories and differences in MDR policies.
There are also fears that additional payment processing costs could affect businesses already facing inflationary pressures.
Industry participants have warned that merchants might eventually recover these expenses from customers through higher prices or other charges.
On Oct 8, the Finance Minister indicated that stakeholders within the payments ecosystem would determine how the MDR issue should be handled.
With no revised committee meeting announced, businesses and payment service providers await clarity on the proposed charges and their implementation date.
