UPI MDR framework needs rationalisation to protect public trust: Report
UPI, a public digital infrastructure, has generated significant convenience for users and productivity gains for the economy, with its long-term economic benefits outweighing the incremental income that could accrue from merchant transaction fees, the report titled 'UPI at a Crossroads: Reintroducing the MDR' released by IIT Bombay said.
The Economic Times Tech reported a new IIT Bombay study suggesting that the proposed merchant discount rate (MDR) framework for Unified Payments Interface (UPI) transactions needs rationalisation to maintain public trust in the digital payments system. The report highlighted that while UPI has provided significant convenience for users and productivity gains for the economy, implementing the proposed MDR framework in its current form could undermine public trust in UPI.
The study suggested that merchants with an annual turnover of Rs 50 crore or more should be mandated to provide UPI as a means for accepting payments, and that remuneration for the UPI ecosystem could be restricted to these merchants, accounting for about 90 percent of NPCI's proposed MDR. The report recommended tweaking the proposed framework to balance generating revenue to support UPI's future expansion, preserving its accessibility and acceptance among users and merchants, while taking into account the broader economic benefits of UPI.
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