Overview
- NPCI issued a September 15 circular reintroducing a 0.4% merchant discount rate on UPI person-to-merchant payments above ₹2,000 with a ₹300 cap for very large transactions.
- The UPI Steering Committee did not meet on Oct 9 and NPCI has not confirmed whether the planned Oct 15 implementation will proceed, leaving the rollout timetable unclear.
- An IIT Bombay report released Oct 11 recommends cutting the MDR to about 0.08%, limiting charges to merchants with annual turnover above ₹50 crore, and funding UPI infrastructure from banks' CASA earnings instead of broad MDR shares.
- Merchant bodies such as the Kerala Textile & Garments Association say a 0.4% fee would erode slim retail margins, encourage a return to cash and prompt merchants to pass costs to customers during the key festive season.
- The core policy choice now is whether to preserve near-free access for most users or build a sustainable revenue pool to pay for security, processing and resilience, with decisions expected from the Steering Committee, RBI or government next.