Around three-fourths of India's digital payment-accepting merchants will remain unaffected by the newly introduced Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions above Rs 2,000, National Payments Corporation of India (NPCI) Managing Director and CEO Dilip Asbe said on Thursday.
Speaking at the SBI Banking and Economic Conclave in Mumbai, Asbe said India has more than 60 million merchants accepting digital payments, with nearly 75 per cent having not recorded a single transaction above Rs 2,000.
"We have about 60 million unique UPI merchants, and 75 per cent of them have not seen a transaction above Rs 2,000. Therefore, the majority of merchants will not be impacted by the MDR," Asbe said.
Large businesses to bear most of MDR burden
Asbe explained that the majority of the MDR burden is expected to fall on larger businesses. Around 80 per cent of the total MDR value is expected to come from merchants generating more than Rs 1,000 crore in annual gross merchandise value (GMV).
Of the remaining amount, nearly half is expected to come from businesses with annual GMV exceeding Rs 1 crore.
According to Asbe, most of these larger merchants already accept credit card payments and are familiar with transaction charges. He said the industry does not expect them to pass the additional cost on to consumers.
"A significant portion of MDR is expected to come from large businesses, most of which already accept card payments and pay MDR," he said.
NPCI says consumer charges unlikely
Asbe, however, acknowledged that a small segment accounting for around 10 per cent of merchant value could potentially attempt to pass the MDR burden on to customers.
He said banks, payment aggregators, acquiring banks and NPCI would work together to ensure that such charges are not passed on to consumers.
"The real risk of a consumer getting charged is just 10 per cent of the overall value," Asbe said.
The NPCI chief also expressed confidence that the new MDR framework would not have a significant impact on overall UPI transaction volumes or values.
