MDR a Small Fee, Will Not Have Major Impact on UPI Volumes: RBI Governor Sanjay Malhotra
- On Wednesday, RBI Governor Sanjay Malhotra stated a small merchant discount rate fee will not significantly impact UPI transaction volumes, noting the Reserve Bank has observed no decline in usage since the levy was introduced.
- The government last month allowed a 0.4 per cent MDR on UPI transactions above Rs 2,000, a charge within the merchant payment ecosystem that merchants pay to banks and payment service providers.
- Shifting toward calibrated tightening, the Reserve Bank raised its benchmark rate to 5.50 per cent on Wednesday, marking the first increase in nearly four years, as the six-member Monetary Policy Committee voted unanimously.
- Malhotra said bank credit growth was expected to remain strong and support economic activity, while system liquidity is unlikely to sustain high surplus levels for an extended period.
- Rate cuts are off the table in the near term, Malhotra cautioned, citing the FCNR deposit scheme's near-USD 133 billion diaspora fundraising as evidence that India's Balance of Payments will soon return to surplus.
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The CSR JournalStarting October 15th, a 0.4% MDR will be applicable on certain merchant UPI payments exceeding ₹2,000. There are concerns that merchants may pass this burden on to customers or avoid accepting UPI. However, the RBI says this is not expected to significantly reduce UPI usage.
MDR a small fee, will not have major impact on UPI volumes: RBI Guv
Mumbai: Reserve Bank of India Governor Sanjay Malhotra on Wednesday, October 7, said levying a “small fee” in the form of merchant discount rate (MDR) will not have a “major impact” on UPI transaction volumes. “As of now, we do not see any drop in volumes. And I don’t personally think that a small fee will have a major impact on the volumes,” he told reporters at the central bank headquarters here. It can be noted that last month, the government…
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