Parliamentary Panel Recommends Quick Introduction of MDR for High-Value UPI Transactions

A recent committee review highlighted concerns regarding the incentive program designed to promote RuPay Debit Cards and low-value BHIM-UPI (Bharat Interface for Money – Unified Payment Interface) transactions. The committee pointed out that the allocation of Rs 2,000 crore in the budget to cover losses incurred from the zero-Merchant Discount Rate (MDR) policy may lead to an unnecessary increase in the Departments Demand for Grants.

The zero-MDR policy was introduced to encourage the adoption of digital payment systems across the country, particularly among small merchants and consumers using lower-value transactions. This initiative aims to enhance financial inclusion by reducing the costs associated with digital transactions.

The committee’s observation raises questions about the sustainability of funding such programs and the implications for future budgetary allocations. The evaluation of the current incentives and their effectiveness in promoting the use of RuPay and BHIM-UPI will be crucial in shaping the direction of digital payment strategies in India going forward.