It has been announced by the FM Nirmala Sitharaman that from 1 January, 2020, businesses with annual turnover of over Rs.50 crore will have to mandatorily offer low cost digital payment options to customers. In addition, the FM has also stipulated that the Merchant Discount Rate (MDR) will not be applicable in such cases; on either customers or merchants. As per the definition, MDR will not be applicable in case of any low cost digital payment mode such as BHIM UPI, UPI QR Code, Aadhaar Pay, Debit Cards, NEFT, RTGS etc. This does not include IMPS transactions and credit card transactions. The idea here is to boost payments via home-grown real-time payments system Unified Payments interface (UPI) at merchant locations and the local card franchise, RuPay cards, rather than Master or Visa.

MDR is the cost paid by a merchant to a bank for accepting payment from their customers via digital means and is expressed as a percentage of the transaction amount. It is also applicable for online transactions and QR-based transactions. In addition, the Department of Revenue (DOR) will notify RuPay and UPI as the prescribed mode of payment for undertaking digital transactions without MDR.