UPI MDR a welcome move, will help support infra for growing digital payments: Mohandas Pai
The central government's decision regarding MDR and UPI is a welcome move that will help fund the infrastructure needed to support rapidly growing digital payment volumes, former Chief Financial Officer and Board Member of Infosys Mohandas Pai has said, noting that nearly 96% of UPI transactions would remain unaffected.
Former Infosys CFO Mohandas Pai has welcomed the government's decision on MDR and UPI, stating it will fund the necessary infrastructure to support the rapidly growing digital payment volumes. Pai noted that 96% of UPI transactions, primarily person-to-person (P2P) payments and those under Rs 2,000, will remain unaffected by the MDR.
The remaining transactions above Rs 2,000 will incur a nominal fee, similar to how credit card processing works. Pai emphasized that MDR is not a tax but a payment to banks and payment providers, akin to credit card processing fees. With transaction volumes projected to surge from 24 billion to 50 billion in the next two years, the IT infrastructure must be upgraded to handle real-time processing.
The government has clarified that the new UPI framework will not impact P2P transactions, which will continue to be free for all amounts. Pai believes that the cost of upgrading the infrastructure should be shared by the merchants who benefit from online payments, rather than being shouldered by banks and depositors.
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