Money & Banking

Payments Corpn caps BHIM UPI merchant discount rate to drive digital payments

Our Bureau Mumbai | Updated on September 26, 2019

To drive digital payments in both small and large merchants’ transactions, the National Payments Corporation of India (NPCI) said the BHIM UPI merchant discount rate (MDR) for large ticket transactions has been capped at a maximum of Rs 100 and made zero at offline merchants for transactions up to Rs 100.

According to NPCI’s notification, MDR, which is the commission charged by a bank providing infrastructure to the merchant to accept payments, has been revised to 0.30 per cent with a maximum cap of Rs 100 per transaction.

Currently, MDR is capped at 0.25 per cent for transactions up to Rs 2,000 and at 0.65 per cent for transactions above Rs 2,000. Further, MDR for offline merchants, where transactions are done through QR (quick response) Scan and Pay, will be zero for transactions up to Rs 100. The new MDR rates will come into effect from October 1, 2019.

Bharat Interface for Money (BHIM) is an app that lets customers make simple, easy and quick payment transactions using a Unified Payments Interface (UPI). Customers can make instant bank-to-bank payments and pay and collect money using their mobile number or Virtual Payment Address (UPI ID).

According to NPCI, UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing and merchant payments into one hood. It also caters to the ‘Peer to Peer’ collect request, which can be scheduled and paid according to requirement and convenience.

Dilip Asbe, MD & CEO, NPCI, said the Zero MDR for transactions up to Rs 100 and increased limit for P2PM (peer-to-peer merchant) category (small merchants) will help faster migration from cash to BHIM UPI.

“The lower MDR will encourage all categories and types of merchants to deploy the asset-lite acceptance infrastructure (BHIM UPI QR code) to grow its digital footprint across the country.

“We envisage this reduction in MDR will encourage merchants to start accepting BHIM UPI and grow the volume on merchant transactions multifold,” said Asbe.

Published on August 31, 2019

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