“It already exists for credit cards on UPI or credit lines on UPI.
At an open house session with finance minister Nirmala Sitharaman in March, some fintech companies had discussed implementing MDR for these transactions.MDR refers to the fee charged to a merchant for processing payments.In August 2022, the Reserve Bank of India (RBI) released a discussion paper proposing a charge structure for UPI payments based on different transaction amounts.
However, the finance ministry later clarified that there was no proposal to levy charges on UPI transactions, and the proposal has since been shelved.Google Pay and PhonePe dominate the UPI payments market in India with a collective share of 85%.
Nearly 49% of respondents cited rewards as the main reason for their preference for online purchases and 34% for offline transactions.“When we go to small cities and small towns, rewards are still a critical factor to try digital payments,” Bansal said.
“We, as an industry, have to channel some investment to drive that penetration where it is needed.”Bansal said Amazon Pay is focused on simplifying the customer journey and combating digital payment fraud by using more real-time variables.However, he noted that concerns such as double debits, financial fraud and internet connectivity issues could affect the growth of digital payments in the country.
Elevate Your Tech Prowess with High-Value Skill Courses Offering College Course Website Indian School of Business Professional Certificate in Product Management Visit Indian School of Business ISB Product Management Visit IIT Delhi Certificate Programme in Data Science & Machine Learning Visit
The implementation of a merchant discount rate ( MDR ) for Unified Payments Interface (UPI) transactions is essential for smaller players to receive a fair share for the value they add to the payment ecosystem, said a top executive of Amazon Pay , the digital payments arm of ecommerce major Amazon.“We have been advocating for a fair value exchange between merchants and consumers or customers and banks, and we are also advocating that some sort of MDR should exist (for UPI transactions),” said Vikas Bansal, CEO of Amazon Pay India, on Tuesday. “It already exists for credit cards on UPI or credit lines on UPI. But it should also come up for bank accounts, so that everybody gets to have a little bit of share for the value they add in the ecosystem.”Bansal was speaking on the sidelines of a new report, 'How Urban India Pays', launched by Amazon Pay and global management consulting firm Kearney.Bansal said MDR must be fair and equitable to avoid hindering the adoption of digital payments.The fintech industry has long demanded MDR for UPI transactions, arguing it is crucial for their long-term sustainability. At an open house session with finance minister Nirmala Sitharaman in March, some fintech companies had discussed implementing MDR for these transactions.MDR refers to the fee charged to a merchant for processing payments.In August 2022, the Reserve Bank of India (RBI) released a discussion paper proposing a charge structure for UPI payments based on different transaction amounts. However, the finance ministry later clarified that there was no proposal to levy charges on UPI transactions, and the proposal has since been shelved.Google Pay and PhonePe dominate the UPI payments market in India with a collective share of 85%. Introducing MDR fees on these transactions may encourage other fintech firms to focus on acquiring new customers and break the duopoly.The report, which surveyed over 6,000 consumers and 1,000 merchants, indicated that 65% of transactions in small towns in India are now digital compared with 75% in larger cities.Millennials (aged between 25 and 43 years) and Gen X (aged between 44 and 59 years) are leading the adoption of all types of digital payment instruments, the report found.Convenience, speed and rewards are the primary factors driving the growth of digital payments in the country. Nearly 49% of respondents cited rewards as the main reason for their preference for online purchases and 34% for offline transactions.“When we go to small cities and small towns, rewards are still a critical factor to try digital payments,” Bansal said. “We, as an industry, have to channel some investment to drive that penetration where it is needed.”Bansal said Amazon Pay is focused on simplifying the customer journey and combating digital payment fraud by using more real-time variables.However, he noted that concerns such as double debits, financial fraud and internet connectivity issues could affect the growth of digital payments in the country.
