New Delhi [India], March 26 : Praveen Khandelwal, the BJP MP from Delhi and National Secretary General of the Confederation of All India Traders (CAIT), has urged the central government to exempt small merchants and consumers from paying Merchant Discount Rate (MDR) on digital transactions.
"In my opinion, at least the small merchants or the small users those who are using digital payment for making payments to their respective sellers and all that they should be kept absorbed from the liability of paying the MDR. But yes, the large houses, those who use digital payments on a greater landscape, they may be charged with a nominal MDR. Because we have seen over the period that digital payment has been helpful for converting the informal economy into the formal economy. Therefore, if any charges are to be levied, the charges should be nominal," Khandelwal said.
Union Finance Minister Nirmala Sitharaman in December 2019 announced that no MDR charges would be applicable on transactions through RuPay and UPI platforms beginning January 1, 2020, a move that promotes digital payments.
On March 24, The Payments Council of India (PCI), an industry body representing a diverse range of non-banking payment industry players, with 180 members, has submitted a formal letter to the Prime Minister Narendra Modi, seeking urgent reconsideration of the Zero Merchant Discount Rate (MDR) policy for Unified Payments Interface (UPI) and RuPay debit card transactions.
The letter acknowledges the government's visionary leadership in promoting digital payments and financial inclusion, making India a global leader in digital transactions.
It highlights the pressing financial sustainability concerns facing the digital payments ecosystem due to the continued Zero MDR policy, which has been in effect since January 2020, the payments industry body added.
The industry body highlights that approximately six crore merchants in India accept digital payments, out of which 90 per cent are categorised as Small Merchants as per the definition of RBI (turn over Rs 20 L and below per annum), with around 50 lakh merchants categorized as large enterprises.
Enabling MDR for Rupay Debit and UPI large merchants will ensure sustainable monetization for service providers without disrupting digital payment adoption at the grassroots level as the merchants already pay MDR for different payment systems, the industry body added.