MUMBAI: In a bid to move the weed out the use of cash and digitise small ticket payments, merchants will no longer have to pay any Merchant Discount Rates (MDR) on UPI transactions below the ticket size of Rs 100 that are done through QR code ‘scan and pay’, effective October 1, the National Payments Corporation of India (NPCI) said on Friday.

This is expected to encourage small grocery stores, chemists and kirana stores across the country to set up basic acceptance infrastructure such as QR code to receive payments made through UPI.

Furthermore, the MDR has been revised to 0.30 percent of the transaction size for with a maximum cap of Rs.100 per transaction. As per the current regime, the rates are capped at 0.25% for transactions up to Rs. 2,000 and at 0.65% for transactions above Rs 2,000.

“The lower MDR will encourage all categories and types of merchants to deploy the asset-lite acceptance infrastructure ( BHIM UPI QR code) to grow digital footprint across the country,” said Dilip Asbe, CEO, NPCI. “We envisage this reduction in MDR will encourage merchants to start accepting BHIM UPI and grow the volume on merchant transactions multi-fold.”

Additionally, NPCI has also increased the limit on P2PM transactions to Rs.1 lakh from the earlier Rs.50000 for “proliferation” of merchant payments using UPI.