UPI MDR Rollout May Be Deferred to Jan 1, Decision Expected Soon: Report

New Delhi, Oct 8 (KNN) The rollout of merchant discount rate (MDR) on select Unified Payments Interface (UPI) transactions may be deferred from October 15 to January 1, with a decision expected in the next few days.

The proposal, if approved, would delay the introduction until after the festive season, providing relief to retailers and businesses during the peak sales period. “The MDR is expected to take effect only after the festive season,” Business Standard reported, citing sources.

The UPI and Service Steering Committee, headed by the National Payments Corporation of India (NPCI), met on Wednesday to discuss the timing and other aspects of the rollout.

The proposal follows concerns from traders and industry associations that MDR would increase transaction costs during festive sales. Earlier this month, wholesale traders and retailers observed a ‘No UPI Day’ to protest the proposed charge on UPI payments above Rs 2,000.

MDR Exemption For Smaller Businesses

Under the existing proposal, a 0.4 per cent MDR would apply to eligible person-to-merchant (P2M) UPI transactions above Rs 2,000, while transactions up to Rs 2,000 would remain exempt.

The exemption for transactions up to Rs 2,000 is expected to remain even if the rollout is deferred, the report said.

The committee is also considering exempting businesses with annual turnover of up to Rs 40 lakh from MDR. This would significantly expand the proposed exemption framework, under which businesses with monthly turnover of up to Rs 1 lakh were earlier to be spared.

Payment Stocks Fall

Reports of the possible deferment triggered a sharp decline in payment aggregator stocks. Paytm shares fell 10 per cent, briefly hitting the lower circuit at Rs 1,558.80, reducing its market capitalisation by nearly Rs 10,972 crore and taking it below Rs 1 lakh crore.

Mobikwik shares fell more than 8 per cent to Rs 234.52, while Pine Labs declined as much as 8 per cent, with shares later trading around Rs 170.21.

The proposed delay comes as merchants and payment industry stakeholders continue to assess the impact of MDR on digital payments, particularly for high-value UPI transactions.

(KNN Bureau)