Bring back MDR, appeals payments industry

The digital payment sector is seeking reintroduction of MDR (merchant discount rate) charges in the union budget as the absence of it is crippling the homegrown payment service providers while multinational companies benefit from levying those charges.

The Payments Council of India (PCI), the industry body for the digital payments ecosystem in the country, has written to the government urging it to roll back the zero MDR regime for UPI and Rupay debit cards transactions.

PCI in its request to the ministry of finance suggested either reinstating the MDR charges or incentivizing the industry with an amount of Rs 4000 crore. The payments industry hopes to have some relief which can then be used by them to further expand the digital payments infrastructure, it said.

The industry anticipates a loss of Rs 5500 crore on account of this zero MDR regime. "With zero MDR, the government has taken away the ability of the payment service providers to invest in and maintain the financial infrastructure they have built," PCI said.

“We request the government to consider a roll back of the zero MDR, with a view to broaden and significantly grow the merchant acceptance base particularly in the MSME space and also to facilitate the deployment of payments infrastructure by non-bank players who have been the biggest deployers of capital in this area for the past few years,” said PCI chairman Vishwas Patel.