Talks On MDR On UPI At A Premature Stage: RBI Governor Sanjay Malhotra
Amid heated debate over the imposition of merchant discount rates (MDR) on UPI transactions, the Reserve Bank of India’s (RBI)…
The Reserve Bank of India's (RBI) governor, Sanjay Malhotra, has stated that discussions regarding the imposition of merchant discount rates (MDR) on Unified Payments Interface (UPI) transactions are still at a premature stage. The government is currently working on amending the Payment and Settlement Systems Act (PSSA), 2007, to introduce extra fees on UPI transactions.
Malhotra emphasized that the costs would ultimately be borne by someone and urged for continued strengthening of public infrastructure before any final decision is made. MDR on UPI was in effect from April 2016 to January 2020 before being scrapped by the government. The payments industry supports reintroducing a nominal MDR on higher-value UPI transactions, while consumer advocacy groups are cautious and await further details.
According to Jefferies, MDR ranging from 15-30 basis points could generate significant revenue for the public infrastructure.
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