Small businesses won't be charged for transactions up to Rs 2,000 while using RuPay credit cards on UPI

The National Payments Corporation of India (NPCI) announced on October 4 that for transactions using RuPay credit cards over the Unified Payments Interface (UPI) that total Rs 2,000 or less, small merchants won't be charged a Merchant Discount Rate (MDR), interchange, or other fees.

"Small Offline Merchants must be classified by Acquirers in accordance with the RBI circular from December 6, 2017. For this category, there would be no interchange, PSP, or app provider fees up to a transaction amount of Rs 2,000 or less "According to NPCI, the company that runs UPI, in a circular.

The circular set forth instructions for putting RuPay credit cards connected to UPI into operation, and NPCI will use the lessons learned to scale up implementation and usage.

The MDR is the price that businesses pay while taking payments. The MDR for credit cards is the highest, ranging from 1-2 percent of the transaction value.

"Small Offline Merchants must be classified by Acquirers in accordance with the RBI circular from December 6, 2017. For this category, there would be no interchange, PSP, or app provider fees up to a transaction amount of Rs 2,000 or less "According to NPCI, the company that runs UPI, in a circular.

The circular set forth instructions for putting RuPay credit cards connected to UPI into operation, and NPCI will use the lessons learned to scale up implementation and usage.

The MDR is the price that businesses pay while taking payments. The MDR for credit cards is the highest, ranging from 1-2 percent of the transaction value.

However, in accordance with government regulations, neither UPI nor RuPay debit cards are subject to fees. Eliminating fees for small retailers is an effort by NPCI, banks, and RBI to increase credit card use for smaller transactions because the bulk of UPI transactions are low value.

"Customers will profit from the simplicity and expanded opportunities for using credit cards. By participating in the credit ecosystem and taking use of asset lite QR codes to accept credit cards, businesses will profit from the rise in consumption "read the circular.

Existing interchange fees for RuPay credit cards will be charged for purchases over Rs 2,000. The acquirer must also pay each payment service and app provider 8 basis points in addition to RuPay interchange.

RBI Governor Shaktikanta Das stated the plan to start with RuPay and link credit cards to UPI in June. In September, the Global Fintech Fest hosted the product's introduction.

Only debit cards could previously be linked to UPI. Customers will now have another way to use their credit cards thanks to the integration of the RuPay Credit Card with UPI, and businesses that are a part of the credit ecosystem will profit from the rise in consumer spending.

In terms of quantity, UPI accounts for the majority of digital retail transactions. The value of the payments system's 6780 million transactions in September for the first time exceeded Rs 11 lakh crore.