Concerns that introducing a Merchant Discount Rate (MDR) would spur a surge in cash transactions are unlikely to materialise, RBI Deputy Governor Shirish Chandra Murmu said on Friday, adding that it was only an “initial apprehension”.
From October 15, a 0.4 per cent MDR will apply to person-to-merchant UPI payments above Rs 2,000. The charge will be paid by merchants, not consumers, and will be capped at Rs 300 for transactions of Rs 75,000 or more.
Payments between individuals, as well as the vast majority of everyday merchant payments, will remain free.
“I don’t think that apprehension will come true. It will be just initial apprehension,” Murmu said while addressing a financial market conclave hosted here by BCC&I on whether more cash would be used because of MDR.
“Because it is a major shift in terms of how basically you are recovering the cost. So, that’s why it may be apprehension only. I don’t think this will have any impact, unlike some voices about whether cash will go up
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