Crime Today News
The financial incentive of ₹1,500 crore to offset some of the payment ecosystem’s operational costs covers only a fraction of the estimated ₹10,000 crore annual cost required to maintain and expand UPI services, according to the Payments Council of India.
Further, there are pressing financial sustainability concerns facing the digital payments ecosystem due to the continued Zero MDR (merchant discount rate) policy, which has been in effect since January 2020.
The estimated outlay for incentive scheme for promotion of low-value BHIM-UPI transactions (P2M) has been cut ₹1,500 crore for FY25 from ₹3,500 crore in FY24.
In a letter to Prime Minister Narendra Modi, the Council emphasised that sustaining India’s digital payments growth would require continuous investments in innovation, cybersecurity, merchant onboarding, compliance, and IT infrastructure.
To address this challenge, the payments industry proposed the introduction of a MDR for RuPay debit cards for all merchants and reasonable MDR of 0.3 per cent for UPI only for large merchants, per the letter.
This approach aligns with existing MDR structures for other digital payment instruments, such as credit cards (approximately 2 per cent) and non-RuPay debit cards (approximately 0.9 per cent), it added.
The PCI assured the government that introduction of nominal MDR for RuPay debit cards and UPI (for large merchants) would not result in any operational disruption, even in the short term, as these merchants were already accustomed to MDR on other payment modes.
The industry body highlighted that approximately six crore merchants in India accept digital payments out of which 90 per cent are categorised as small merchants as per definition of RBI (turn over ₹20 lakh and below per annum), with around 50 lakh merchants categorised as large enterprises.
PCI underscored that enabling MDR for Rupay Debit and UPI large merchants will ensure sustainable monetisation for service providers without disrupting digital payment adoption at the grassroots level as the merchants already pay MDR for different payment systems.
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