New Delhi, Sep 15 — Industry experts on Tuesday said the UPI ecosystem needs a viable economic foundation to support continued investment and innovation, while ensuring that consumers and small merchants continue to benefit from affordable digital payments.
Reacting to the National Payments Corporation of India’s (NPCI) decision to introduced a charge of 0.4 per cent that most merchants will have to pay banks and payment processors on UPI payments they receive in excess of Rs 2,000 per transaction, the Payments Council of India (PCI) said it has consistently maintained that UPI needs a sustainable economic model to support its scale.
“The continued growth of UPI requires banks, fintech companies, payment aggregators and other ecosystem participants to make sustained investments in infrastructure, cybersecurity, fraud prevention, technology and customer service. The introduction of 0.4 per cent MDR on P2M transactions above Rs 2,000, with a Rs 300 cap on transactions of Rs 75,000 and above, is an important step towards a viable economic model while keeping UPI free for consumers,” said Vishwas Patel, Chairman, PCI.
At the same time, sustainability must not come at the cost of financial inclusion.
“The continued zero-MDR protection for eligible small and micro merchants, along with support for expanding digital acceptance in Tier 3–6 centres, will help preserve UPI’s accessibility. The UPI ecosystem needs a viable economic foundation to support continued investment and innovation, while ensuring that consumers and small merchants continue to benefit from affordable digital payments,” Patel said in a statement.
The new UPI framework introduced has no impact on any person to person transactions. UPI will continue to remain completely free for all person-to-person transactions, irrespective of the amount transferred, according to an explainer issued by the Finance Ministry on Tuesday.
The Finance Ministry clarified that MDR is neither a tax nor a charge collected by the Government or NPCI. It is distributed among payment ecosystem participants, including banks and payment application providers, to support the operation and continued expansion of the UPI ecosystem.