Finance Minister Nirmala Sitharaman made it clear that to promote digital payments, no MDR charges will be applicable. (Photo Credit: PTI File)
Government on Tuesday notified all companies with annual turnover of Rs 50 crores or more to make RuPay and Unified Payments Interface (UPI) as prescribed mode of payments for undertaking digital transactions without Merchant Discount Rates (MDR). However, if companies failed to install and operationalize the facility for accepting payment through the prescribed electronic mode, a penalty of Rs 5000 per day will be levied from February 1, 2020 onward, the government notification adds.
Ministry of Finance: If companies failed to install and operationalize the facility for accepting payment through the prescribed electronic mode, a penalty of Rs 5000 per day will be levied from February 1, 2020 onward. https://t.co/2I4SKZgfYG— ANI (@ANI) December 31, 2019
The payment without MDR will benefit the businesses as it is the cost paid by a merchant to a bank for accepting payment from their customers via digital means. Moreover, the merchant discount rate is expressed in percentage of the transaction amount.
Following the government notification, the companies with turnover of Rs 50 crores or more mandated by Department of Revenue, will now be required to provide facility of payment through RuPay Debit Card and UPI QR code to their customers.
Earlier, Finance Minister Nirmala Sitharaman made it clear that to promote digital payments, no MDR charges will be applicable on transactions through homegrown RuPay and UPI platforms beginning January 1, 2020.
“After extensive consultation with stakeholders, banks and so on. I’m happy to say that announcement which was made in the budget will see the notification coming on January 1, 2020 whereby those modes which are getting notified will not have charges under the MDR being levied on them,” she said.
In her Budget speech in July, Sitharaman had proposed that businesses should offer low cost digital modes of payment such as BHIM UPI, UPI QR Code, Aadhaar Pay, Debit Cards, NEFT, RTGS etc. to their customers, and no charge or MDR shall be imposed on customers to promote digital payment.
(With PTI inputs)