Cancel zero merchant discount rate on UPI and RuPay debit card payments, industry body Payments Council of India writes to Ministry of Finance


The Payments Council of India (PCI) has requested the cancellation of the Zero Merchant Discount Rate (MDR) scheme for payments made through the Unified Payments Interface (UPI) and RuPay debit cards.

In a communication to the Ministry of Finance, PCI – the largest industry body for digital payment aggregators – said it expects a loss of Rs 5,500 crore from UPI and RuPay debit card payments, as the MDR on the payout of these two options is capped at zero. , the industry body said, limits the ability of aggregators to “invest in and maintain financial infrastructure” in the payments ecosystem they have built.

“The payments industry is hoping to receive some relief which can then be used by them to further expand the country’s digital payments infrastructure and work on new innovative initiatives to drive digital financial inclusion in the country,” he said. declared the PCI.


Impact of MDR restore

The removal of the merchant discount rate, or MDR, for payments through the Unified Payments Interface (UPI) – which accounts for more than half of digital transactions – and RuPay debit cards could result in additional fees for some customers , especially in rural and semi-urban areas. -urban areas, which could in turn hinder the proliferation of digital payment methods.

MDR is a commission charged to merchants for processing payments made through UPI, digital wallets, debit and credit cards. (Removing transactions from here).

With the proliferation of digital payments, most merchants who have implemented the payment service and are accepting fees, which are often between 1-3%.

Digital payments, especially through UPI and digital wallets, have exploded over the past year, both in value and volume. Between January and December 2021, over 38 billion transactions worth almost Rs 72 trillion were conducted through UPI alone. Although payments via UPI and RuPay debit cards attract no MDR, it is capped at 0.9% for all other debit cards.

The Union Cabinet had recently approved a package of Rs 1,300 crore as reimbursement to banks as compensation for the zero MDR, as well as to boost digital payments.


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