UPI-Rupay debit card payments will not be free for big merchants, preparations to impose merchant fee

The free payment phase through UPI and Rupay debit cards is now ending. The government will now impose merchant fees for transactions through the two. Before 2022, the merchant used to pay a Merchant Discount Rate (MDR) for the same.

According to Amar Ujala sources, if the government brings back the MDR fee on UPI and Rupay debit card payments, it will not have a direct impact on consumers, as no fee will be charged to them for making payments. A formal proposal to bring back MDR on UPI payments for large merchants was sent by banks to the central government. Now the concerned departments are considering it positively. Before the MDR was removed in 2022, merchants used to pay less than one percent of the transaction amount as a fee.

Payment companies say that bringing back MDR is necessary. The cost of compliance with the new rules has increased. Without fees on UPI payments, many businesses may struggle to make profits. The government is giving subsidies to banks and fintechs to cover these processing costs, which is not enough. The government has reduced the payment subsidy from Rs 3,500 crore to Rs 437 crore in the budget.

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