Govt moves to allow MDR; Qcomm braces for festive rush
- The Indian government is proposing amendments to the Payment and Settlement Systems Act, 2007, laying groundwork for a potential overhaul of the zero-merchant-discount-rate regime for Unified Payments Interface transactions.
- India scrapped merchant discount rates in January 2020 to accelerate adoption, but rising infrastructure costs have made free merchant payments unsustainable, according to industry executives and analysts.
- Brokerage firm Bernstein suggests limiting charges to large merchants, noting that transactions above Rs 2,000 account for nearly 70% of transaction value but only 4% of volume.
- Walmart-Owned PhonePe and Alphabet's Google Pay handle nearly 80% of UPI transaction volumes, so ultimate benefits will depend on how the government distributes any merchant fees among banks and apps.
- As the government considers these changes, UPI is now live in Singapore, United Arab Emirates, and France, and the move aims to fund global expansion through sustained infrastructure investments.
35 Articles
35 Articles
Lok Sabha passes bill to allow charges on UPI, digital payments
The Lok Sabha has passed a Bill to amend the Payment and Settlement Systems Act, 2007, authorising the government to permit banks and service providers to levy charges on UPI and other electronic payment modes. This move aims to create a sustainable revenue model for the digital payments ecosystem, shifting from the current exemption of UPI transactions from such charges.
RBI has funds to pay for UPI platform without having to charge merchants, customers
The government has introduced a Bill in Parliament that will allow it to notify the kinds of transactions that can attract such a charge. So far, UPI has been free for merchants and customers
The rules for those making free payments through UPI may change in the future. The government has proposed a legal provision that would allow a Merchant Discount Rate (MDR) to be imposed on certain UPI transactions. Currently, no fee has been implemented, but the possibility appears to be open for large businesses to charge fees on their transactions.
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