Indian government plans to reintroduce MDR on UPI above ₹2,000
Business
Heads up: The Indian government wants to reintroduce merchant discount rates (MDR), basically a fee banks charge merchants, on UPI transactions over ₹2,000.
This fee was dropped in 2020 to boost digital payments, but now the plan is to apply it again for larger purchases by big merchants.
Analysts say MDR could raise revenue
The idea is to help banks and fintechs recover money spent on tech and payment systems.
With high-value UPI transactions making up just 4% of total volume but nearly 70% of value, analysts say charging MDR here could bring in serious revenue without messing much with everyday UPI use.
The Payment and Settlement Systems (Amendment) Bill gives the government power to decide which payment methods stay fee-free.