Lower charges: Payments industry fears another zero-MDR moment

As the RBI has raised ATM transaction fees from Rs 15 to Rs 17 and adjacent Rs 21 aft 5 escaped transactions, we bash not spot them directionally going for little charges.

The Reserve Bank of India’s (RBI) determination to interval a treatment insubstantial connected outgo transaction charges has stunned the integer payments industry, which has, successful fact, been pushing for a restoration of the merchant discount complaint (MDR) connected Unified Payments Interface (UPI) and RuPay cards.

The banal markets and astir manufacture executives took the cardinal bank’s Wednesday announcement connected a treatment insubstantial to mean a further thinning of margins successful India’s payments ecosystem. As a result, Paytm proprietor One97 Communications’ stock prices dropped instantly aft the announcement.

Payment manufacture executives that FE spoke to admitted to being amazed by the determination to reappraisal charges. Some saw successful it a revisiting of the government’s December 2019 determination to exempt RuPay and UPI transactions from MDR. “I consciousness it’s truly the authorities speaking present due to the fact that determination is an influential acceptable of ample merchants who privation escaped transactions. The manufacture has been good with interest exemptions for GST-registered merchants with turnover of nether Rs 2 lakh. If we don’t get adjacent that, possibly it’s clip customers commencement paying for their transactions,” a elder manufacture enforcement said.

Some others took the presumption that the treatment insubstantial whitethorn beryllium an archetypal measurement towards restoring MDR connected UPI and RuPay and a much remunerative pricing regime. Anand Kumar Bajaj, founder, MD & CEO, PayNearby, said, “We judge the treatment insubstantial connected charges could beryllium a measurement towards bringing backmost MDR connected UPI and RuPay. As the RBI has raised ATM transaction fees from Rs 15 to Rs 17 and adjacent Rs 21 aft 5 escaped transactions, we bash not spot them directionally going for little charges.”

Most assemblage analysts hold that the payments concern successful India is rather unremunerative successful and of itself and lending offers the lone means of making money. In a study dated December 1, Kotak Institutional Equities said that portion astir outgo models crossed the satellite are profitable, with merchants consenting to carnivore transaction costs, the Indian illustration is different.

“In India, a exemplary that is built connected UPI has inherent challenges astatine the level of ownership of the infrastructure. Arguably, the merchant should beryllium consenting to wage a higher interest for an instantaneous transportation of wealth specified arsenic is disposable successful UPI. However, we presently don’t person specified a pricing,” the study said.

In September, Dilip Asbe, MD & CEO, National Payments Corporation of India (NPCI), said astatine the Global Fintech Fest that the authorities is apt to reverse its zero-MDR rule. “We powerfully judge that determination has to beryllium tenable MDR, tenable charges due to the fact that arsenic the volumes are growing, we must, arsenic an ecosystem, acceptable up a way to marque it much cost-efficient,” Asbe said. He added that NPCI has been successful changeless speech with the ministries of concern and electronics & accusation exertion to let tenable charges connected transactions. “I can’t stock overmuch astir it, but we are hoping the authorities volition denote it very, precise soon,” helium had said.