RBI Governor Malhotra Says Premature to Confirm UPI Transaction Charges

Why in news

RBI Governor Sanjay Malhotra stated it is premature to confirm transaction charges on UPI as the government considers a Merchant Discount Rate (MDR) for large merchants.

Background

The government has proposed a Merchant Discount Rate (MDR) of 0.3%-0.5% specifically for large merchants on UPI transactions exceeding Rs 2,000. The current model relies on subsidies which are struggling to sustain the rapid growth in transaction volume.

Facts for Prelims

• S&TUPI: A real-time payment system developed by the National Payments Corporation of India (NPCI).
• FactProposed MDR: 0.3%-0.5% for large merchants on transactions above Rs 2,000.
• BodyRBI: The central bank of India responsible for regulating the payment ecosystem.

For Mains

Q. Discuss the challenges of sustaining a subsidy-based model for digital payments and evaluate the implications of introducing Merchant Discount Rates (MDR) on UPI's adoption.

Dimensions to cover in your answer

• sustainability of subsidies
• impact on small merchants
• digital public infrastructure (DPI) goals
• financial inclusion

Keywords: Merchant Discount Rate · Digital Public Infrastructure · Fiscal Sustainability · Financial Inclusion · Payment Ecosystem

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