UPI Update: UPI Transactions to Become Expensive! Know Details
If you also spend most of your shopping and family related expenses through UPI, then this news is for you. The government is planning to levy Merchant Discount Rate (MDR) on transactions worth more than Rs 3000 through UPI. This step is being taken by the government with the aim of helping banks and payment service providers with technical and operational costs.
The Value of Large Digital Transactions is Increasing
Banks and payment service providers have been consistently saying that the value of large digital transactions is increasing. Since 2020, UPI’s trade volume has increased to Rs 60 lakh crore. But due to the zero MDR policy implemented from January 2020, there is a lack of investment in this sector. The costs of service providers in large transactions have already increased significantly.
What will Going to Change?
According to a report in NDTV Profit, there will be no fee on small transactions. However, MDR fee may be levied on transactions above Rs 3,000. This fee will be transaction-based, i.e., MDR will be levied based on the amount of money you transact. It will have no bearing on the merchant’s business. The Payments Council of India (PCI) has recommended a 0.3% MDR for large merchants. Currently, credit and debit cards have an MDR of 0.9% to 2%, but RuPay cards have been exempted from this.
PMO and Related Departments have Discussed
PMO, Department of Finance and departments related to financial services had a detailed discussion on this issue. After discussions with banks, fintech companies and the National Payments Corporation of India (NPCI), a decision could be taken in one to two months. Through this policy, instead of promoting UPI, the focus will be on running a digital payment system for the long term. This will provide resources for banks and service providers to improve technology. Customers may also have to pay additional fees for large transactions.
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