RBI Governor Malhotra Says Premature to Confirm UPI Transaction Charges
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims·
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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