Payments industry faces ripple effect of zero MDR policy- The New Indian Express

By Express News Service

BENGALURU: The digital payments industry has been voicing their concerns ever since the government introduced a zero MDR policy in December 2019, directing banks and payment platforms not to levy charges from merchants in any business-toconsumer (B2C) transactions.

According to the latest report from Consumer Voice (consumer protection group), the policy is adversely affecting players in the ecosystem and the ways in which they contribute to financial inclusion.

According to per the Zero MDR policy, which came into effect from January, 2020, business establishments with an annual turnover of over Rs 50 crore shall offer low‐cost digital modes of payments such as BHIM, UPI, QR code and Aadhaar Pay as well as certain debit cards, NEFT or RTGS transactions to customers.

No charges or MDR shall be levied on either the customers or the merchants.

The central bank will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payments.

The report added that the decision of the government aimed at bringing more financial inclusivity has proved to be counterproductive as the debit card payments in terms of volumes fell from 4,637 lakh transactions in January 2020 to 2,723 lakh transactions in May 2020.

It added that the non-bank payment service providers are struggling to sustain their businesses and on the other hand, the provision to absorb MDR costs is affecting profitability.