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MC Explains| What is MDR and why the Centre clarified its stance on UPI

A question being widely debated is whether MDR should be charged for UPI transactions.

August 22, 2022 / 05:51 PM IST
Representative image

Representative image

The Reserve Bank of India (RBI) on August 17 released a discussion paper on regulating various payment system-related charges which triggered a fresh round of debate on whether or not payments instruments like United Payments Interface (UPI) and Rupay-based cards should attract Merchant Discount Rate (MDR) charges.

In this explainer, Moneycontrol explains what MDR is and whether the renewed charges, if any, will have an impact on businesses:

What did the RBI’s discussion paper say?

The RBI’s discussion paper contained 40 questions on various charges involved in using the Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) system, Real Time Gross Settlement (RTGS) system and UPI. It also covers charges included while using payment instruments such as debit cards, credit cards and Prepaid Payment Instruments (PPIs).