Now the MDR is a thing of the past. The Central Government has decided to waive off the MDR (Merchant Discount Rate) charges for UPI and Rupay Card.
This new step would promote more digital transactions. Definitely it is a huge relief to the merchants who are already accepting payment through the UPI QR code and Rupay Card.
Especially for Two Payment Methods
Though the low cost digital payment modes are BHIM UPI, NEFT, RTGS, UPI QR Codes, Debit Cards etc. But the government is going to waive off the MDR charges on two payment modes-
- Rupay Debit Card
- UPI QR Codes
What is MDR? What were the Charges?
MDR, the Merchant Discount Rate is a fee which the merchant pays to the bank. This fee is applicable on your payment to the merchant via digital means.
Banks charge this fee from the banks as they provide this system of cashless transactions. This cashless system can be Debit card, credit card, UPI etc.
Now the government has made some of the cashless transactions totally free for the merchants. If a customer’s pays to the merchant using UPI apps or Rupay debit card, the merchant would not pay any MDR to the bank.
However, government has already waived MDR on UPI and Rupay transactions if the amount is less than Rs 2000. Now there is no such limit and It is totally free.
You may be aware that there was 0.6% MDR for debit card payment and about 2% for the credit card payment. There was no charge for the UPI Payment.
Hence, the end of MDR will surely give relief not only to the merchants, but also to the customers. Because ultimately the customers had to pay the transaction charges.
Suggested- New Per Day Limit of UPI Tranactions
Who Gets the MDR Money?
It seems that banks charge MDR from the merchants. But there are other stakeholders as well who share the MDR fees. The MDR money goes to these three.
- The bank who is providing the transaction facility
- The vendor who installs the Point Of Sale (POS) machine
- And your card network provider like Rupay, Visa etc.
Protest by Companies
The waiver of MDR is hurting all the stakeholder who used to get the fees. That is why they are opposing the government decision on zero MDR.
Banks would not get any money for the cashless system provided by them. However, government has said that cashless transaction also benefits the banks as they have to deal with less cash.
Digital Payment Mandatory for most of the Businesses
The businesses must have to provide the cashless payment methods if the annual turnover is more than Rs 50 crore. The government has made this rule. The cashless payment method can be the, UPI, Rupay Debit Card and UPI QR Code. Also, there should be Zero MDR charges applicable to customers as well as the merchants to use these digital payment modes.
Moreover, after 1st February 2020 on non compliance to provide the facility of Rupay and UPI payment modes to the customers, the companies would have to pay fine of ₹5000 per day.
Recommended – Why UPI is Better Payment System
Comment Policy:Your words are your own, so be nice and helpful if you can. Please, only use your real name and limit the amount of links submitted in your comment. We accept clean XHTML in comments, but don't overdo it please.