Reports that GoI is considering a merchant discount rate (MDR) on UPI payments made to businesses with annual turnover of ₹1-1.5 cr, and only on transactions above ₹2,000, deserve scrutiny.
The concern behind the proposal is legitimate. Banks, payment service providers and tech companies incur expenditure on cybersecurity, settlement, fraud management, customer support and system resilience. The Parliamentary Standing Committee on Finance, citing evidence submitted by department of financial services, noted that current government incentives cover only about 11% of industry costs, and recommended that GoI develop a sustainable revenue model for the UPI ecosystem rather than relying indefinitely on budgetary support.
