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New Plan For High Transactions: In the last few years, the trend of online payment has increased rapidly in India and now people use UPI for everyday small and big transactions. Meanwhile, a big update is coming for the users who make heavy UPI payments. The government is planning to restart the Merchant Discount Rate (MDR) on digital payments. Under this, a charge of up to 0.5 percent can be imposed on UPI transactions above Rs 2,000. According to the information, the final decision on implementing this new rule can be taken within the next one month.

Will small traders get relief?

Small shopkeepers are going to get a big relief from this new scheme of the government. Under this, merchants with annual turnover up to Rs 1.5 crore will not have to pay any MDR fee on any UPI payment, no matter how big the amount the customers have paid them. The main objective of the government is that no financial burden of this new rule should fall on small businessmen.

Impact only on payments above Rs 2,000

If we look at government reports, this new rule will affect very few transactions. In fact, payments of Rs 2,000 or more are only 4 percent of total merchant payments (P2M). Today, about 86 percent of UPI payments are for small amounts up to Rs 500. Additionally, about 10% of online payments are between Rs 501 and Rs 2,000. Only the remaining 4 percent of transactions are above Rs 2,000. This is the reason why the government feels that this decision will not make much difference to the pockets of the general public and small shopkeepers.

Why is the government making this change?

The government is bringing this change because the cost of running the UPI system is continuously increasing. Currently, the government provides an incentive of 0.15 percent to companies on transactions of less than Rs 2,000, but the Payments Council of India (PCI) believes that this assistance is too little to meet the increasing expenses of the digital payment network. The Department of Financial Services (DFS) has also told a committee of Parliament that only 11 percent of the total cost of companies is covered with government help, due to which there is difficulty in maintaining the digital payment system.

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What is MDR?

MDR is the fee or service charge that any shopkeeper has to pay to his bank or payment company (like Paytm, PhonePe) in exchange for taking online or digital payments from customers.