Payments Council of India seeks merchant discount rate for RuPay cards, UPI payment

PCI has submitted a formal letter to Prime Minister Narendra Modi, seeking urgent reconsideration of the zero MDR policy for UPI and RuPay debit card transactions.

While the government has provided financial incentives to offset some of the ecosystem’s operational costs, the letter points out that the Rs 1,500 crore allocation covers only a fraction of the estimated Rs 10,000 crore annual cost required to maintain and expand UPI services. “The PCI emphasized that sustaining India’s digital payments growth would require continuous investments in innovation, cybersecurity, merchant onboarding, compliance, and IT infrastructure,” it said in the letter.

The PCI assured the government that introduction of nominal MDR for RuPay Debit cards and UPI (for large merchants) would not result in any operational disruption, even in the short term, as these merchants were already accustomed to MDR on other payment modes.

The industry body said that approximately six crore merchants in India accept digital payments out of which 90 per cent are categorised as small merchants as per definition of RBI (turn over Rs 20 lakh and below per annum), with around 50 lakh merchants categorized as large enterprises. Enabling MDR for Rupay Debit and UPI large merchants will ensure sustainable monetization for service providers without disrupting digital payment adoption at the grassroots level as the merchants already pay MDR for different payment systems, PCI said.

“MDR is the lifeline of the digital payment ecosystem. Without it, the sustainability of the entire infrastructure is at risk. The introduction of a reasonable MDR for large merchant transactions will allow the industry to continue investing in innovation, cybersecurity, grievance redressal, and merchant support, ultimately ensuring that UPI continues to thrive,” PCI said.

The PCI has sought Prime Minister’s personal intervention in this matter and an opportunity to present its case in greater detail. “The industry body remains committed to working closely with the government and regulators to strengthen India’s digital payments ecosystem while ensuring financial sustainability,” it said.