MDR on UPI Services – The Union Ministry of Finance has made it clear that there will not be any consideration in the government to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means, it said. “The Govt had provided financial support for #DigitalPayment ecosystem last year and has announced the same this year as well to encourage further adoption of #DigitalPayments and promotion of payment platforms that are economical and user-friendly,” the ministry said.
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What is MDR in UPI Services ?
Merchant Discount Rate or MDR is the rate or amount that a merchant pays for using a lender’s credit card or debit card services for accepting their customers’ bills. Presently, only Rupay-based debit cards and UPI do not attract any MDR charge.
The current MDR design for mature products is set up like a percentage of transaction value, while something like UPI has zero MDR, the bone of contention today. The contention is that, while the RBI has also sought response on queries related to payment charges in the NEFT/RTGS systems, among others, industry members are largely divided on imposition of MDR charges in UPI.
