MUMBAI: Amid pushback from industry, National Payments Corporation of India (NPCI) has deferred the rollout of merchant discount rate (MDR) on select UPI transactions until after Diwali.
In a statement on Tuesday, NPCI said that a new date of implementation will be notified separately. The merchant fee was earlier supposed to come into effect from Oct 15, amid the peak Navratri season when festive sales volumes surge.Retailers heaved a sigh of relief as the move will spare them the need to reconfigure billing and accounting systems, besides briefing store staff at the point of peak footfalls."Deferment avoids this and gives the trade time to prepare.....the
festive quarter is the single most important trading window for apparel retail. UPI has become the default payment mode at the store counter, and any change in the cost of accepting it directly affects checkout practices, reconciliation and consumer experience," said Santosh Katariya, president, Clothing Manufacturers Association of India (CMAI).Payment companies recovered from early losses after NPCI confirmed that MDR implementation would begin immediately after Diwali.
Paytm fell over 7% to Rs 1,571 before recovering 9.1% to close at Rs 1,714, up 1.5%. One MobiKwik Systems recovered from a 4% dip to close at Rs 245, up 1.7%, while Pine Labs rebounded from Rs 154.4 to Rs 164.8, gaining 1.1%.Associations, however, urged govt to revisit the Rs 2,000 threshold given that a large share of apparel retail value (particularly for purchases made during weddings and festive) breaches that mark.The MDR framework was approved by NPCI on Sept 15, with a 0.4% charge for eligible person-to-merchant UPI transactions above Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above.Kumar Rajagopalan, executive director & CEO at Retailers Association of India (RAI), said that the fee should ideally be a fixed amount rather than a percentage of the transaction value. He added that inflation has already been squeezing their margins.