Zero MDR to impact business, says Payment Council

The government’s proposal of abolishing merchant discount rate (MDR) will impact non-bank payment providers as banks will recover the money from them, industry players said.

The Union Budget proposed doing away with any charges on customers and merchants. MDR is the rate that the merchant has to pay to the service providers of digital payments.

It is proposed to be applicable to businesses with a turnover of ₹50 crore that facilitate low-cost digital payment modes such as BHIM, UPI, QR code, Aadhaar Pay as well as certain debit cards, NEFT or RTGS transactions.

“This announcement of industry bearing MDR would lead to the whole digital payment industry without any business and revenue model,” said Naveen Surya, Chairman Emeritus, Payment Council of India (PCI).

PCI said digital payments in India had received quite high interest from various investors, both domestic and international, and any “knee-jerk” policy changes were likely to spook such investors.

“Non-bank payment service providers (PSPs) like aggregators/ processors are a significant part of the ecosystem. If there is no commercial model, they will be forced to shut down, banks may have multiple ways to recover money from the merchants, but non-bank players do not have any other avenue than the MDR,” Loney Antony, co-chairman, PCI, and vice-chairman, Hitachi Payments, said.

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Printable version | Feb 25, 2020 6:13:11 AM |

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