UPI MDR Charge: Not a single penny will go into the government account, understand the complete math of MDR charge

UPI MDR Charges: A very important news has come out for crores of people who make daily payments through UPI. Recently there was news that a fee will be imposed on payments above Rs 2000. This news raised the concern of the common man. People started to feel that now digital payments will take extra money out of their pockets. But the government has removed all these apprehensions.

The new rules on UPI payments are going to be implemented from October 15. Under this, 0.4 percent MDR (Merchant Discount Rate) Rs. 2000 will be levied on merchant payments. Government sources have made it absolutely clear that not even a single rupee of this fee will be collected from the common customers. This entire charge has to be paid by the merchant i.e. the shopkeepers.

The money will not go to the government account

Opposition parties criticized the move and called it a tax on the public. In response to these allegations, government sources have clarified that not even a single penny of the amount received from the MDR will go to the government. This should not be treated as a tax, cess or surcharge of any kind. In fact, this money will be distributed among the banks and companies that help run the UPI system.

Under the proposed rules, 40 percent of the recovered amount will be given to the customer’s bank. After this, a 30 percent stake will be given to the payment gateway. 20 percent will be given to the UPI app and the remaining 10 percent will be given to the bank sponsoring the app. This system is designed to financially strengthen the digital payment ecosystem.

No impact on small shopkeepers

If you think that if you pay at the shops near you they will suffer, this is not true. The new rules have given a big relief to small shopkeepers. Shoppers making payments up to Rs 1 lakh per month through UPI QR Code will not be charged any new charges. According to the report, about 96 percent of business transactions in India fall into this category.

Apart from this, there will be no charge on mutual transactions (P2P) between two people. No matter how much money you send to your friends or family, it will remain free as before. The general public will not have to pay any additional fees on most daily payments.

Limited charges will be charged for essential services

The National Payments Corporation of India (NPCI) issued a circular in this regard on September 15. Under this circular, separate rules have been laid down for certain services. A fixed charge of only Rs 5 will be charged on payments above Rs 2000 at important points like railways, telecom, fuel and insurance. The rate is kept even lower at 0.02 percent on payments related to stock market and mutual funds. Even if an individual makes a large payment of Rs 75,000 or more, the maximum MDR will be limited to Rs 300.

Prepare to dispel rumours

Some expressed fear that the fee could lead to people abandoning digital payments and reverting to cash. The government has dismissed these concerns as completely false. The Indian Banks Association (IBA) is soon going to launch a major awareness campaign to clear the misconceptions prevalent in the market.

5 percent of the total revenue from this new system will be deposited in a special fund. This fund will be used to promote UPI among small traders. It is also expected that the GST Council may consider reducing the 18 percent GST levied on MDR in the near future.