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UPI MDR Charges Back Infrastructure Upgrade, Says TV Mohandas Pai
TV Mohandas Pai supports a new charge on some UPI payments.
He says 96 per cent of UPI transactions will not be affected.
Person-to-person payments will remain free.
Payments below Rs 2,000 will also remain exempt.
The 0.4 per cent charge applies to certain merchant payments above Rs 2,000.
Pai says this charge is not a tax.
He says banks and payment companies need money to improve the systems that process UPI payments.
Arun Chaturvedi also praised India’s leading role in digital payments.
TV Mohandas Pai said 96 per cent of UPI transactions will not face MDR charges.
He said person-to-person payments and transactions below Rs 2,000 are exempt.
A 0.4 per cent MDR will apply to merchant transactions exceeding Rs 2,000.
Pai argued MDR is a payment to banks and providers, not a tax.
He said the charges will help fund infrastructure upgrades as UPI volumes grow.
- Who
- TV Mohandas Pai, Chairman of Aarin Capital and former Infosys CFO and board member, discussed the decision; Arun Chaturvedi also commented.
- What
- A 0.4 per cent Merchant Discount Rate will apply to certain UPI merchant transactions exceeding Rs 2,000.
- Where
- Pai spoke to reporters in Bengaluru; the report was datelined New Delhi.
- When
- The comments were made on Wednesday.
- Why
- The charge is intended to help fund upgrades to digital-payment infrastructure as UPI transaction volumes increase.
Key facts
- Affected transactions
- Merchant transactions exceeding Rs 2,000
- MDR rate
- 0.4 per cent
- Exempt transactions
- Person-to-person payments and payments below Rs 2,000
- Estimated unaffected share
- 96 per cent of UPI transactions
- Current and projected volume
- UPI transactions are expected to rise from 24 billion to 50 billion in two years
- Past failure rates
- UPI transaction failures were previously as high as 15 per cent to 30 per cent
- Purpose cited
- Funding real-time-processing and digital-infrastructure upgrades
Quotes
TV Mohandas Pai
Chairman of Aarin Capital and former CFO and board member at Infosys
“In the past, UPI experienced transaction failure rates as high as 15 per cent to 30 per cent due to sudden surges in volume. With transaction volumes expected to grow from 24 billion to 50 billion in two years, the entire IT infrastructure must be upgraded to support real-time processing.”
thehansindia.com
“It is important to clarify that MDR is not a tax. It is a payment made to the banks and payment providers, similar to how credit cards work”
thehansindia.com
Sources
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