1.1% MDR will be charged on PPI UPI transactions effective from april 1, 2023 | Clarification with real world examples

[TechnoFinoTechnoFino is verified member.]

Greetings everyone,

There are some misconceptions regarding the recent proposal by NPCI to impose MDR on PPI UPI payments. MDR will be charged for two types of payment methods: PPI (prepaid payment instruments) and UPI linked Rupay credit cards.



Here are some examples of which transactions are still free and on which transactions merchants will be charged. If you want to send money from your bank account via UPI using BHIM, PhonePe, Google Pay, or any other UPI app, it will be free for you and the receiver.

Similarly, if you want to pay any merchant from your bank account via UPI using BHIM, PhonePe, Paytm, or any other UPI app, it will be free for you and the merchant, with no MDR charged.

However, if you want to pay a merchant from your wallet (e.g., Amazon Pay wallet UPI) or using Rupay credit cards UPI via UPI, and the transaction amount is less than Rs. 2000, it will be free for you and the merchant, with no MDR charged. But if the transaction amount is more than Rs. 2000, it will be free for you, but the merchant will be charged up to 1.1% MDR (depending on the merchant category).

Please note that customers will not be charged any fees under any circumstances. Also, merchants must sign an agreement before accepting PPI UPI payments; otherwise, customers won't be able to pay that merchant using any PPI UPI.

 

[vignesh]

if cutomer make a make payment from paytm wallet to paytm merchant qr in this case merchant will be charged 1.1%?
do clear me this doubt @TechnoFino

 

[mubeennazar]

Rather than peeping into the customer's phone, Will there be any way for the merchants to know that the Customer is using the CC or wallets to make payments via UPI? If not, then it's fine since they won't be asking the customers to bear the MDR fee since they will assume that it is a usual UPI payment. Hope they will not bother us, as they do whenever they see a credit card.

 

[curious]

Rather than peeping into the customer's phone, Will there be any way for the merchants to know that the Customer is using the CC or wallets to make payments via UPI? If not, then it's fine since they won't be asking the customers to bear the MDR fee since they will assume that it is a usual UPI payment. Hope they will not bother us, as they do whenever they see a credit card.

Only merchants who accept "wallets" will be charged, and again they have to sign up for this. Merchants who don't sign up cannot be paid through wallets, (or credit cards in UPI) and so no MDR for them

 

[Akash Topder]

Well the glory days may be over. Now merchants will not sign to receive payments from wallets and CCs through UPI thus blocking the CC penetration in India

 

[Chaitanya-a]

Well the glory days may be over. Now merchants will not sign to receive payments from wallets and CCs through UPI thus blocking the CC penetration in India

LOL. CCs weren't meant to be used for UPI anyways. This was just side perk of it.
It won't affect the CC penetration by even 5%.

 

[SiddharthR]

if cutomer make a make payment from paytm wallet to paytm merchant qr in this case merchant will be charged 1.1%?
do clear me this doubt @TechnoFino

No, as Paytm wallet is accepted by Paytm Merchant QR only & is free for both consumer and merchant

 

[Akash Topder]

LOL. CCs weren't meant to be used for UPI anyways. This was just side perk of it.
It won't affect the CC penetration by even 5%.

Rupay CC issuance increased after UPI linkage even without major banks. So it will affect Rupay CCs most.

 

[TechnoFinoTechnoFino is verified member.]

if cutomer make a make payment from paytm wallet to paytm merchant qr in this case merchant will be charged 1.1%?
do clear me this doubt @TechnoFino

No, paytm wallet is still not available on UPI route.

 

[vignesh]

No, as Paytm wallet is accepted by Paytm Merchant QR only & is free for both consumer and merchant

Cofirm r8?

 

[iNokia]

Rupay CC issuance increased after UPI linkage even without major banks. So it will affect Rupay CCs most.

But rupay cc already had Mdr charges right? Did anything change for rupay cc via UPI? @Abhishek012

 

[Dr. Drake]

So no point getting a RUPAY variant now. The only USP of getting a rupay card was paying via upi. Khatam Tata bye bye to rupay now 😉

 

[WhoU]

This is only for PPI. Credit cards does not come under PPI @TechnoFino

 

[Akash Topder]

This is only for PPI. Credit cards does not come under PPI @TechnoFino

You might have a point there. PPIs are wallets and prepaid cards. CCs aren't technically PPIs.

 

[WhoU]

You might have a point there. PPIs are wallets and prepaid cards. CCs aren't technically PPIs.

Yeah the news is only for PPIs. Credit cards UPI payments already had such 2% MDR fees since 2022.

@TechnoFino

Upcoming RuPay-UPI credit cards to charge 2% MDR: Report - ET BFSI

After the talks with the National Payments Corporation of India and banks, it has been decided that of the 2% MDR charge, 1.5 per cent will go to the issuing bank, while the rest will be shared by RuPay and the acquiring entity.

bfsi.economictimes.indiatimes.com

 

[Abhishek012]

Just like we have Debit Card, Credit Card, Prepaid/Wallet Card network

Similarly, UPI also has Debit UPI, Credit on UPI, PPI on UPI network -

Debit UPI is link with our Bank Accounts (Saving/Salary/Pension/Current account).

Credit on UPI is link with our Credit Cards

PPI on UPI is link with our eWallet/Prepaid Cards.

Recent circular release by NPCI for UPI charges on merchant transactions above 2k is only for "PPI on UPI"

Debit UPI, which is link with our Bank A/C is 100% Free.

I hope people will now be able to differentiate between Debit UPI, Credit on UPI and PPI on UPI (eWallet UPI).

PPI on UPI link eWallets apps list - https://www.npci.org.in/what-we-do/upi/ppi-apps

 

[SiddharthR]

Cofirm r8?

Yup

 

[sourpai]

This issue has created lot of kaos and drama on twitter...complete miss interpretation at all levels. Lot of influencers have added this link and blaming government for additional charges by calling them taxes... 🤣

I guess NPCI should have managed this better from PR perspective. At least better headline than just calling 1.1% charges for UPI above Rs. 2000 transaction. They did mention PPI, but people omitted that conveniently to create controversies

 

[iNokia]

This issue has created lot of kaos and drama on twitter...complete miss interpretation at all levels. Lot of influencers have added this link and blaming government for additional charges by calling them taxes... 🤣

I guess NPCI should have managed this better from PR perspective. At least better headline than just calling 1.1% charges for UPI above Rs. 2000 transaction. They did mention PPI, but people omitted that conveniently to create controversies

Aaj mast pop corn khaya Twitter ko dekhke. Sabki awareness dikh gayi.

 

[Abhishek012]

Aaj mast pop corn khaya Twitter ko dekhke. Sabki awareness dikh gayi.

Log differentiate nahi kar pate hain Debit UPI, Credit on UPI and PPI on UPI (eWallet UPI) me.