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Amazon Pay India bats for fair MDR on UPI payments to small merchants
Economic Times
·
1y ago
Medial
The CEO of Amazon Pay India, Vikas Bansal, has advocated for the implementation of a fair merchant discount rate (MDR) for Unified Payments Interface (UPI) transactions. Bansal believes that smaller players should receive a fair share for the value they contribute to the payment ecosystem. The fintech industry has long been demanding MDR for UPI transactions to ensure their long-term sustainability. The introduction of MDR fees may encourage other fintech firms to compete with dominant players like Google Pay and PhonePe in the UPI payments market. A recent report by Amazon Pay and Kearney revealed that digital transactions are increasingly prevalent in smaller towns in India, with convenience, speed, and rewards driving the growth of digital payments. However, concerns such as fraud and internet connectivity issues could impact the adoption of digital payments in the country.
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Budget Allocation For Promoting Digital Payments Almost Halves
Inc42
·
1y ago
Medial
The allocation for promoting RuPay debit cards and low-value BHIM-UPI P2M transactions in FY24 is INR 2,485 Cr. However, the Union Budget 2024-25 did not allocate any funds for promoting digital payments. Amazon Pay India CEO Vikas Bansal recently stated that a MDR regime is necessary for smaller UPI players to receive their fair share.
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Exclusive: Major shift in UPI as Govt may allow MDR for large merchants
Entrackr
·
2m ago
Medial
Exclusive: Major shift in UPI as Govt may allow MDR for large merchants As of now, the government provides 15 basis points (bps) of subsidy for UPI transactions below Rs 2,000. One basis point is one-hundredth of a percentage point. Banks may soon find a monetization opportunity in Unified Payments Interface (UPI) transactions, with the Finance Ministry (FM) and the Reserve Bank of India (RBI) likely to permit Merchant Discount Rate (MDR) collection only from large merchants. According to three sources familiar with the matter, the move is under active consideration and targets businesses handling high volumes of UPI payments. "Large merchants such as Amazon, Dream11, Swiggy, Zomato, and Zepto may soon start paying MDR to banks," said one of the sources requesting anonymity. "The Finance Ministry and the RBI are likely to define a threshold such as daily UPI transaction volume/value for MDR applicability on high-UPI transacting merchants," the source added. MDR on UPI refers to the fee that banks charge merchants for processing UPI-based payment transactions. “The new MDR slab comes with a condition that large merchants will not be allowed to pass on MDR to consumers, they must bear it as a cost of doing business,” said the person quoted above. According to sources, the discussion on applying MDR on UPI transactions has been ongoing since the last quarter of FY25. The potential move comes in response to growing concerns from banks and payment aggregators around the sustainability of UPI infrastructure, which currently operates without any revenue model and inadequate subsidy. “Banks are already bearing losses on UPI. Ongoing costs like server upgrades, tech investments, and compliance add up. Without MDR from large merchants, sustaining UPI’s growth will be difficult,” said one of the senior banking executives of a leading private bank requesting anonymity. Last year, the Payments Council of India (PCI) proposed that large merchants, already paying 2% MDR on cards, should also pay 25 bps for UPI, as subsidies aren’t needed given UPI’s popularity and lower cost. In March, PCI wrote to PM Modi highlighting that the government’s Rs 1,500 crore subsidy covers only a small part of the Rs 10,000 crore needed annually to sustain UPI. Ongoing investment in innovation, cybersecurity, compliance, and infra justifies the 25 bps MDR for large merchants. Banks used to charge 30 bps on UPI transactions before it was waived off completely by the FM in 2020. Sources say the government will likely allow banks to charge MDR on large merchants soon, but no exact timeline has been set. Queries sent to RBI and the Finance Ministry received no response. As per sources, the policy is still at a deliberation stage, and no final decision has been made by the Finance Ministry or RBI. Policy decisions may change or evolve before formal notification. Despite soaring UPI volumes, the current revenue model is unsustainable, causing strain on banks, Payment Aggregators, and Payment System Providers (PSPs). Introducing MDR could provide crucial support to banks and enable a revenue-sharing model that benefits PAs, PGs, and PSPs.
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Startup Policy Forum Backs PCI’s Call to Reinstate MDR on UPI: Reasons & Repercussions Explained
OutlookIndia
·
4m ago
Medial
The Startup Policy Forum supports reinstating a Merchant Discount Rate (MDR) on UPI transactions for large merchants while exempting small businesses. This initiative aims to align UPI fee structures with those of card payments, addressing declining government subsidies for digital payments. By reintroducing MDR, the sector hopes to fund technology upgrades and maintain the payment infrastructure. However, this change may raise consumer prices and potentially impede digital payment adoption among merchants who might revert to cash.
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Cabinet approves extension of incentives for UPI transactions up to Rs 2,000 for small merchants
Economic Times
·
4m ago
Medial
The Union Cabinet approved a Rs 1,500 crore incentive scheme for small digital transactions, aimed at reducing costs for stakeholders in the UPI ecosystem. The scheme applies to UPI transactions under Rs 2,000 for small merchants, providing a 0.15% per transaction incentive. This initiative supports local businesses by making digital payments cost-effective, with zero Merchant Discount Rate (MDR). It excludes large merchants, focusing solely on small merchants to encourage digital transaction growth.
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Startup Policy Forum endorses discount rates on UPI for large merchants
YourStory
·
4m ago
Medial
The Startup Policy Forum (SPF), consisting of leading Indian startups like Razorpay and CRED, supports introducing a merchant discount rate (MDR) on Unified Payments Interface (UPI) for large merchants. A two-tiered MDR framework is proposed, exempting small merchants while imposing controlled fees on larger ones. This approach aims to drive innovation, curb fraud, and sustain the payments industry. SPF highlights the necessity of balancing growth with inclusion and stresses the urgency due to recent financial strains on fintechs.
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Govt May Impose MDR on UPI Payments Over INR 3,000 to Cut Banking Strain
StartupTalky
·
1m ago
Medial
The Indian government is considering reintroducing the Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions above INR 3,000 to alleviate financial burdens on banks and payment providers. Since January 2020, a zero-MDR policy has been in place, but it has been financially unsustainable. A proposed change could see larger transactions incurring MDR, while smaller ones remain free. The Payments Council of India suggests a 0.3% MDR for large merchants to support digital payment infrastructure.
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UPI payments above Rs 3,000 may attract charges: Report
Economic Times
·
1m ago
Medial
The Indian government is considering reintroducing merchant charges on Unified Payments Interface (UPI) transactions over Rs 3,000 to enhance revenue streams. Currently exempt, the proposed fees would apply to larger transactions, exempting small-ticket items. This change aims to balance financial sustainability for banks and payment providers, following the removal of Merchant Discount Rates (MDR), while keeping UPI favorable for small merchants. Meetings have been held to reassess the policy framework as UPI transactions dominate the digital payment landscape.
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To ease financial squeeze, fintechs mull seeking MDR restoration or higher subsidy
Economic Times
·
4m ago
Medial
The fintech industry is urging the Indian government to restore merchant discount rates (MDR) or increase subsidy allocations for Unified Payments Interface (UPI) transactions, claiming the current Rs 1,500 crore allocation is insufficient for growth. The government recently removed incentives on RuPay debit cards and large merchant transactions, further straining the sector. Industry leaders suggest introducing a low MDR for merchants with higher turnovers to address funding issues while maintaining zero MDR for smaller merchants.
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Government considering return of merchant charges on UPI, RuPay
Economic Times
·
5m ago
Medial
The Indian government is considering reintroducing merchant discount rates (MDR) on UPI transactions and RuPay debit cards for large merchants with annual turnover over Rs 40 lakh. Presently, no MDR is charged on these digital payments. Industry insiders argue that reintroducing the fee would alleviate the financial burden on banks and payment aggregators, which have seen increased compliance costs and lower budget allocations for processing subsidies. Smaller merchants with turnover under Rs 40 lakh would continue without MDR charges.
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Paytm shares tumble 10% as government dismisses MDR reports
YourStory
·
1m ago
Medial
Shares of One97 Communications, Paytm’s parent company, fell 10% after the Finance Ministry dismissed rumors of reintroducing merchant discount rates (MDR) on UPI transactions. The government emphasized its commitment to zero MDR since January 2020 to promote digital payments. Industry bodies had proposed introducing MDR on large merchants, but the ministry labeled such claims as false and misleading. Paytm recently enhanced its UPI service by allowing personalized IDs for improved user privacy and security.
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