With a view to promote digital transactions banks have asked the government to make small vendors eligible for QR-based Unified Payments Interface (UPI) transactions at no cost i.e. no MDR or merchant discount rate shall be payable by the merchant in case the proposal is implemented to secure the payment accepting infrastructure provided by the bank.

At present based on the transaction value, MDR charges apply and for transactions below Rs. 1000, MDR @ 0.25% apply while for still higher sums over Rs. 1000, 0.65% is what is charged as MDR fee.

Typically, small vendors avoided the payment acceptance mode due to the high charges but the UPI can consider on-boading them as peers. Further for banks, the deal so far has not been lucrative in the absence of customers who have the skill to make payments using QR-based payments using their smartphones.

For the payment via these modes, government in a move to fast boost them has made a tab for the MDR payable in respect of payments via AePS, debit card, UPI for transactions made up to value Rs. 2000 up till two years with effect from January 1, 2018.

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