75% of merchants insulated from UPI MDR, says NPCI CEO Dilip Asbe

Around three-fourths of India’s digital payment-accepting merchants have never recorded a transaction of over Rs 2,000 and are insulated from a merchant discount rate on Unified Payments Interface (UPI), National Payments Corporation of India (NPCI) managing director (MD) and chief executive officer (CEO) Dilip Asbe said on Thursday.

Asbe explained that about 80 per cent of the total MDR value collected will come from businesses that record more than Rs 1,000 crore in annual gross merchandise value (GMV). Half of the remaining 20 per cent value will come from merchants recording over Rs 1 crore in annual GMV.

Barring the remaining 10 per cent merchant value, the other businesses already accept credit cards and are unlikely to pass on any costs to customers.

However, he cautioned that the remaining 10 per cent of value from merchants could risk passing on MDR costs, but banks, payment aggregators, acquiring banks and NPCI will ensure such charges are not passed on to customers.

“The real risk of a consumer getting charged is just 10 per cent of the overall value,” he said.

Asbe was speaking at the SBI Banking and Economic Conclave in Mumbai. India has more than 60 million merchants who accept digital payments.

“We have about 60 million unique merchants. 75 per cent of these merchants have not seen a transaction above Rs 2,000. So, there is no impact of our policy on them,” he added.

His comments come at a time when traders and business associations across India have announced a “No UPI Day” on October 2 to protest the 0.4 per cent merchant discount rate (MDR) on Unified Payments Interface (UPI) transactions above Rs 2,000 from October 15.

He further added that the industry does not expect a major impact on UPI transaction volume and value.

Last week, NPCI notified MDR on UPI transactions made to select merchants. The apex retail payments body introduced a 0.40 per cent fee on transactions above Rs 2,000 made to merchants.

An MDR is not applicable to customers. It is a fee that a merchant pays to accept digital payments such as UPI, debit cards and credit cards. Peer-to-peer transactions are free of any MDR.