UPI’s new MDR pot: 5% of collections to be used for bringing small merchants online

The National Payments Corporation of India (NPCI) has proposed a dedicated fund financed from Merchant Discount Rate (MDR) collections to support small merchants and expand digital payment infrastructure in smaller cities, as India prepares to introduce MDR on select UPI transactions from October 15.

The fund will support merchant onboarding, encourage higher UPI transaction volumes among existing small merchants and help build digital payment infrastructure across Tier 3 to Tier 6 centres. It will also support notified Central government schemes, according to NPCI’s framework.