Debate Intensifies Over Merchant Discount Rate Policy on Digital Transactions

Praveen Khandelwal presses the government for MDR exemptions for small merchants, while the Payments Council of India calls for reconsideration of MDR policy. The policy impacts millions of small merchants and poses financial sustainability concerns for digital payment providers.

Praveen Khandelwal, BJP MP from Delhi and National Secretary General of the Confederation of All India Traders (CAIT), is urging the central government to exempt small merchants and consumers from Merchant Discount Rate (MDR) charges on digital transactions. He argues that small users should be shielded from this liability, unlike large corporations who could handle nominal MDR costs.

Finance Minister Nirmala Sitharaman previously announced, starting January 2020, no MDR charges on RuPay and UPI transactions to boost digital payments. However, the Payments Council of India (PCI) seeks a reconsideration of the Zero MDR policy due to financial sustainability concerns affecting the digital payments ecosystem.

The PCI emphasizes that with six crore merchants accepting digital payments, 90% fall under the category of small merchants as per RBI's definition. The PCI suggests enabling MDR for large merchants using RuPay and UPI to ensure sustainable service provider monetization while maintaining grassroots digital payment adoption.

(With inputs from agencies.)