-
Major banks want to introduce Merchant Discount Rate (MDR) on UPI transactions for large merchants.
-
The Centre may not agree, as UPI is a flagship digital payments project with international ambitions.
-
Banks argue that MDR is necessary to cover costs, but the government may prioritize UPI’s success over bank profits.
Major banks are pushing for the introduction of Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions for large merchants. However, the Centre may not agree, as UPI is a flagship digital payments project with international ambitions. The government has waived off MDR on UPI transactions since 2020, and banks argue that this has created an artificial preference for UPI among merchants.
Banks want to introduce MDR on transactions above Rs 2,000, but the government may prioritize UPI’s success over bank profits. The RBI and NPCI have been discussing the issue, but no decision has been made yet. The government pays annual subsidies to banks and payment companies for facilitating UPI transactions, and this may continue to support the growth of UPI.
