A new Merchant Discount Rate (MDR) on UPI transactions above Rs 2,000 is set to take effect from October 15, sparking a significant political debate in India regarding its impact on small traders, consumers, and the future of digital payments.
Key Points
- A new Merchant Discount Rate (MDR) of 0.4% will apply to UPI transactions above Rs 2,000 from October 15.
- The MDR charge will be borne by merchants, not consumers, and is capped at Rs 300.
- BJD chief Naveen Patnaik and Congress leader Bhakta Charan Das have criticised the move, citing potential burdens on small traders and consumers.
- The BJP defends the policy, stating 96% of UPI transactions remain free and it strengthens digital payment infrastructure.
- Person-to-person (P2P) UPI transactions will continue to be free of charge.
BJD chief Naveen Patnaik on Friday said the interests of small traders and common people should be protected in view of the Centre's decision to introduce Merchant Discount Rate (MDR) charges on certain UPI transactions above Rs 2,000 from October 15.
Patnaik, who is the Leader of Opposition in Odisha Assembly, made the remarks after arriving at the Biju Patnaik International Airport from Delhi.
"The interests of the common man and small traders should be protected," the five-time former chief minister told reporters.
Political Reactions To UPI MDR
The BJP rejected Patnaik's remarks, saying consumers would continue to make UPI payments free of charge.
BJP spokesperson Anil Biswal alleged that Patnaik was misleading people on the issue.
"UPI transactions below Rs 2,000 will remain free for merchants. As many as 96 per cent of UPI transactions will remain free as they are below Rs 2,000. Only 4 per cent of transactions will be impacted," Biswal said.
The revised framework provides for a 0.4 per cent MDR on eligible person-to-merchant UPI transactions above Rs 2,000, while the charge is to be borne by merchants and not passed on to consumers.
Biswal said opposition parties should refrain from "running propaganda" against the MDR charges.
"The decision to charge on UPI transactions was taken with the approval of the Parliament's Standing Committee on Finance. The committee has several MPs from the opposition, including Congress leader P Chidambaram," he said.
He also claimed that the charges would help strengthen digital payment infrastructure.
Concerns From Opposition And Traders
Earlier, Odisha Pradesh Congress Committee president Bhakta Charan Das had criticised the BJP-led Centre over the introduction of MDR charges on certain UPI transactions above Rs 2,000.
He alleged that the move would put an additional burden on people amid high inflation.
"When we shop, we already pay taxes. Now, the Modi Govt wants to tax us for paying through UPI. This will hurt consumers, small traders, grocery shop owners and vegetable vendors. Why burden millions of people with another tax when banks can handle digital payments?" Das said in a post on X.
Some traders' associations have also opposed the proposed MDR charges. The state's petrol dealers' association has sought exemption for fuel dealers from the charges.
Understanding The New MDR Framework
The new MDR framework will come into effect from October 15. Person-to-person UPI transactions will continue to remain free, while the standard MDR for eligible merchant transactions above Rs 2,000 will be 0.4 per cent, subject to a cap of Rs 300.
