Indian Authorities Eye UPI Fee To Bolster Digital Payments

Indian payment authorities, the central bank and the industry are collectively pushing the government to allow a fee on digital payment platforms to large merchants, which are made through homegrown networks to help boost growth.

According to a Reuters report, this charge is called Merchant Discount Rate (MDR) and is crucial for boosting investment for payments firms, and reviving slowing growth in payments made via the Unified Payments Interface (UPI).

What Will The Fee Be?

A rate between 0.2% to 0.3% of the value of each transaction has been suggested, which would be lower as compared to the charges attached to credit and debit card payments.

MDR is usually borne by the merchants, an industry executive said, therefore it will not be passed on to the customers, the report cited sources.

As per the report, the final decision on the fee will be made by prime Minister Narendra Modi's office but the federal finance ministry supports its implementation.

India's Cashless Initiative

PM Modi has decided that the usage of cash should be reduced in order to maintain transparency as well as the formalisation of the economy, which started off with his demonetisation initiative. The COVID-19 pandemic also increased the popularity of digital payments in India.

While the average monthly volume of UPI transactions has jumped from about 1.6 billion to more than 17 billion currently, as per data from NPCI.

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