Vikas Bansal, CEO of Amazon Pay India, has advocated for the implementation of a Merchant Discount Rate (MDR) regime for Unified Payments Interface (UPI) transactions. Speaking to the Economic Times, Bansal emphasized the need for MDR to ensure smaller players receive a fair share for their contributions to the payment ecosystem. He highlighted the existing MDR for credit cards on UPI and suggested that similar charges should apply to bank accounts to support a balanced value exchange among merchants, consumers, and banks.
The Need for MDR on UPI Transactions
Bansal stated that a fair and equitable MDR regime is essential to avoid hindering the adoption of digital payments. MDR charges are fees paid by merchants to issuers, acquirers, and merchant aggregators. While UPI payments are currently exempt from MDR, credit cards incur MDR fees between 1%-2% of the transaction amount.
Supporting a Sustainable Ecosystem
The CEO underscored that MDR would provide a fair value exchange and support the sustainability of the digital payments ecosystem. This perspective aligns with previous calls from other fintech players. Last year, Payments Council of India (PCI) chairman Vishwas Patel requested INR 8,000 Cr for MDR support for UPI and RuPay debit card transactions for FY24.
Balancing Growth and Sustainability
Bansal's proposal aims to create a balanced approach that ensures the growth of digital payments while maintaining a sustainable business model for payment service providers. By implementing MDR for UPI transactions, all players in the payment ecosystem can benefit and continue to innovate.
Conclusion
The push for MDR on UPI transactions by Amazon Pay India highlights the need for a sustainable and fair payment ecosystem. With continued investment and support, the digital payments landscape in India can grow robustly while ensuring fair value distribution among all stakeholders.
