India’s markets regulator is in talks with the National Payments Corporation of India (NPCI) over the newly introduced merchant discount rate (MDR) on certain UPI transactions, including those involving capital-market participants, as stockbrokers warn that the charges could raise their costs.
“NPCI has just issued a statement, and we are still in talks with them,” Securities and Exchange Board of India (Sebi) chairman Tuhin Kanta Pandey said at an event on Thursday.
MDR is a fee charged to merchants on certain digital payment transactions, with the proceeds distributed among participants in the payments ecosystem, including banks and payment service providers.
The new framework mandates an MDR of 0.4% on person-to-merchant (P2M) UPI transactions above ₹2,000. For transactions of ₹75,000 and above, the fee is capped at ₹300 per transaction. Capital-market transactions involving mutual funds, securities and brokers will attract a lower MDR of 0.02%, also subject to a cap of ₹300.
The charges, initially scheduled to take effect on 15 October, have been postponed until after Diwali.