Aye Goverment or slaughter nationality
UPI MDR fixed at 0.4% for transactions over Rs 2,000; capped at Rs 300 per transaction
At around 40 bps MDR, the ecosystem could generate up to Rs 16,000 crore in revenue annually.
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It’s for merchants not users. And its not about government but banks.
They can’t offer this free forever.
MDR income is divided among ecosystem partners such as account issuing banks, beneficiary banks, consumer-side payment service providing (PSP)banks, merchant acquiring payment aggregator and NPCI.
While that may be technically true,
the expectation is that such charges will be passed on to the end-users opting to pay via UPI as an additional “convenience fee” by the merchants and middlemen supporting UPI payment gateways.
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It’s also applicable below 2000, in case of credit cards.
Not true.
I already use Rupay UPI and no merchant can ask for MDR charges to customer.
This is a business expense merchant can deduct this from profit.
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see from tommrow itsel no shop will never accept upi , everybody will ask cash
Misconfutson will circulated everywhere
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And if the business want to maintain the same margin for every sale, what do you think they’ll do?
Not true. Nobody wants their margins to come down. So when the product is priced this 0.4 percent will be added. If you tell you will pay cash, they will reduce 0.4 percent right away.
Happened yesterday with one of my friend. He has to pay 2.69L for some jewellery. Since he had UPI limit of 2L per day he ask payment via credit card. The cashier quickly asked for 2.79L saying MDR has to be borne by you. Ultimately he used 2 banks to pay via UPI. Same thing will happen with UPI too.
I personally bargained at the time I bought iPhone. Once the rate was finalised I said I will give cash. Reduce 2 percent. Otherwise I will swipe my credit card. Instantly he agreed to reduce 2 percent.
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At least banks & fintech will make more money 
Interesting to see what would brokers like zerodha do? MDR is much less for capital market, but it will still be significant due to volumes.
Do they pass on the cost or bear it?
Smaller or unorganized vendors might do that, but most organized chains and bigger merchants won’t reduce it. So In a way this gets build into the cost.
Foe eg. When you eat at fancy restaurant or buy from Croma or fuel up at Petrol Pump, they have multiple payment options with different cost - Credit card (costs almost 2%) debit card (slightly cheaper), UPI (now 0.4%) and cash … Most business accept this as cost of doing business, and wont charge you differently based on what payment medium you are using.
So UPI MDR will be direct hit to margin which they will have to accept it.
But yeah, businesses which were only dealing on cash (& UPI) or have very low margins might negotiate.
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2,69,000 x 0.40 MDR = 1076
Agree. But don’t you think when margins of these companies come down they will increase their prices?
Even though MDR is 0.4 percent margins won’t fall by same rate since all of them don’t use UPI. If 50 percent of them use, then margins drop by 0.2 percent. To make up for this don’t you think they will increase prices across all products by 0.2 percent?
Supermarkets, departmental stores even charge for a carry bag.
MDR is anyways borne by card holder. If you swipe the card you will see the charges unless you have a card which gives exemption to specific brand of fuel.
Ultimately UPI volume will come down. Cash that was circulating had reduced so much. So basically it was float income for banks indirectly.
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Credit card boss. UPI MDR has not started yet.
MDR on credit card is minimum 2 percent. It also depends on the card type. It can go uptil 4 percent from what I know.
Edit: Just checked with one of my friend who has a shop. It’s 3 percent plus gst at 18 percent. So it comes to 3.54%
If a business has high value transactions they can get 1.5 percent plus GST (1.77 effective rate).
Only jewellers pass this to customers because gold has low margin. (Not talking about making charges)
RBI prohibits merchants from passing MDR charges to customers for debit card payments since January 2018. You must absorb TDR as a business cost and cannot add surcharges or convenience fees at checkout for regulated payment methods.
Thats why government ask npci and banks to keep upi free. Because merchants were not adapting debit and credit cards payments options in india
Now they can’t go back because if they don’t accept upi payments, customers will go to next store who accepts
at first they said upi may attract small fee in future to cover the cost of upi infrastructure, but now they turned into another tax income for gov, how long till we get breathing tax?
You’re not getting it. if I’m selling a candy pack for say 100, my margin is say 20 and this new transaction costs me extra 5, I don’t have to charge 5rs as convenience charge to get my margin back. I just have to increase the MRP from 100 to 105 and every other competitive candy business will do the same to maintain the same margin. What this does is it increases the prices of most products by a small amount that you don’t notice right away.
You’re still paying the MDR charge but it’s built into the price. This hits the poor and vulnerable the most, those who cannot do UPI. If the government said you can charge customers whatever you want, then I’d price it 105 to the one paying with the UPI, and 100 to the one paying cash. If I have like 50% cash customers, maybe I can price it at 103. But still, the poor guy is paying extra 3rs for the convenience of the UPI guy. Do you get that?