Industry Odisha Bureau, Sep 18: The government will closely monitor the MDR rollout from October 15. Officials want Merchant charges prevented from reaching customers directly. The government says MDR is necessary for payment ecosystem sustainability. Payment aggregators are also being consulted before implementation.
MDR Rollout Under Watch
Authorities will monitor Merchant behaviour after MDR implementation. The focus will remain on transparency and user protection. Merchants are expected to absorb applicable charges appropriately. Consumers should not face hidden payment surcharges. The rollout will therefore test compliance across the digital payments ecosystem.
Tax Issues Move Into Focus
Tax issues could become important after MDR implementation. Goods and services tax will apply on eligible MDR charges. Officials said concerns can be raised before the GST Council. The GST Council can examine any wider tax implications. That provides a policy route for future clarification.
ITC Could Ease Merchant Burden
Eligible Merchant businesses may use ITC against GST liability. ITC can reduce the effective tax cost of MDR. This could offer relief to registered businesses. The benefit will depend on each Merchant’s tax position. Small merchants may face limited exposure because of exemptions.
Low-Value Transactions Stay Free
UPI transactions below ₹2,000 remain exempt from MDR. That protects many small-value Merchant payments. RuPay debit card transactions also remain free from MDR. The exemptions reduce costs across everyday digital transactions. They also limit GST concerns for smaller merchants.
High-Value Payments Face Charge
Eligible UPI Merchant transactions above ₹2,000 attract MDR. The announced rate stands at 0.4%. Transactions above ₹75,000 face a ₹300 cap. That limits charges on very large payments. The structure aims to balance revenue generation with affordability.
MDR Seen Supporting Competition
The government believes MDR can support smaller payment companies. Many platforms currently operate without sustainable transaction revenue. That limits investment in technology and security. MDR could provide a more stable revenue model. It may also strengthen competition within UPI.
Domestic Payment Ecosystem Gets Policy Support
The government has linked MDR with payment-system resilience. Domestic platforms need capital for infrastructure and fraud prevention. Customer service also requires sustained investment. A viable revenue model could support these functions. That makes MDR more than a simple transaction levy.
Monitor Framework Will Shape Rollout
The government will monitor how merchants and payment providers respond. Tax issues will remain another area of scrutiny. The GST Council may intervene if clarification becomes necessary. ITC could soften the burden for eligible businesses. For Merchant users, transparency will remain critical. The MDR rollout will ultimately test both sustainability and consumer protection.
