No MDR Charges On RuPay, UPI Payments From Jan. 1: Nirmala Sitharaman
A sign showing various electronic payment methods is displayed at a shoe and apparel store in Bengaluru, India. (Photographer: Dhiraj Singh/Bloomberg)  

No MDR Charges On RuPay, UPI Payments From Jan. 1: Nirmala Sitharaman


Finance Minister Nirmala Sitharaman on Saturday said no merchant discount rate, or MDR, charges will be applicable on transactions using RuPay and UPI platforms from Jan. 1, 2020.

The Department of Revenue will soon notify RuPay and Unified Payments Interface as the prescribed mode of payment for digital transactions without any MDR, she said after meeting with the chief executive officers of public sector banks in New Delhi.

Accordingly, all companies with a turnover of Rs 50 crore or more will be mandated by the revenue department to provide the facility of payment through RuPay debit card and UPI QR code to their customers, she said.

MDR is the cost paid by a merchant to a bank for accepting payment from customers via digital means. It is expressed in percentage of the transaction amount.

"After extensive consultation with stakeholders, banks and so on, I'm happy to say that announcement which was made in the budget will see the notification coming on January 1, 2020, whereby those modes which are getting notified will not have charges under the MDR being levied on them," Sitharaman said.

In her budget speech in July, Sitharaman had proposed that businesses should offer low-cost digital modes of payment such as BHIM UPI, UPI QR code, Aadhaar Pay, debit cards, NEFT, RTGS, etc., to their customers, and no charge or MDR shall be imposed on customers to promote digital payment.

All banks will now start a campaign to popularise RuPay debit card and UPI in order to strengthen the digital payment ecosystem and move towards a less-cash economy. The finance minister said the government has already amended two laws—Income Tax Act, 1961, and the Payments and Settlement Systems Act, 2007,—to give effect to these provisions.

The minister also launched a common e-auction platform to sell the attached assets of defaulters for the improved realisation of value. The platform is equipped with property search features and navigational links to all public sector banks’ e-auction websites, provides single-window access to information on properties up for e-auction as well as a facility for comparison of similar properties.

According to latest data, a total of 35,000 properties have been uploaded on the platform by public sector banks. The state-run lenders have attached assets worth over Rs 2.3 lakh crore over the last three financial years.

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