rupay: Bankers seek fee on RuPay debit card use

India’s high-street banks have reached out to the government seeking a merchant discount rate (MDR) on RuPay debit cards on the grounds that it will provide them with the much-needed funds to enhance payment network security and develop innovative payment solutions.

MDR is charged to a merchant for the payment processing of debit and credit card transactions. At present, there is zero MDR for transactions through the RuPay debit card.

A senior banker said the Indian Banks’ Association (IBA) has also written a letter to the finance ministry seeking restoration of MDR on RuPay debit cards.

“We have argued that MDR is essential and will foster sustainability and enable continued investments in cutting-edge technologies,” the banker said on condition of anonymity, adding that these investments will strengthen the security infrastructure, enhance user experience and provide dedicated support to merchants, thus strengthening the entire payments ecosystem.

“The IBA also said in its letter that by allowing MDR on RuPay cards, more banks can be encouraged to embrace RuPay as their preferred card for issuance,” said another banker, who also did not wish to be identified.

A government official said that in the past too, various stakeholders have expressed concerns regarding the potential adverse impact of the zero MDR regime on the growth of the digital payments ecosystem. “We have received their representations. The government is committed to promoting the use of payment platforms that are economical and user-friendly,” he said.