Money & Banking

Budget proposal not to charge MDR will hurt industry, says Payments Council

Our Bureau Mumbai | Updated on July 09, 2019 Published on July 09, 2019

The payments industry has raised concerns over the Budget proposal to levy zero MDR on all merchants and has said it will lead to the collapse of the payments acquiring industry.

Loney Antony, co-Chairman, Payments Council of India, and Vice-Chairman, Hitachi Payments said, “Non-bank payment service providers (PSPs) like aggregators/ processors are a significant part of the eco-system. If there is no commercial model, they will be forced to shut down, banks may have multiple ways to recover money from the merchants, but non-bank players do not have any other avenue than the MDR.”

Finance Minister Nirmala Sitharaman in the Union Budget 2019-20 proposed that no charges or Merchant Discount Rate (MDR) will be imposed on customers as well as merchants. “RBI and banks will absorb these costs from the savings that will accrue to them on account of handling less cash,” she had said as part of a slew of measures to further encourage digital payments.

In a statement on Tuesday, PCI said the announcement will deflate the hard work done by the acquiring industry, and MDR, if not charged to the customers and merchants, should be borne by the government. This will help the acquirers focus and invest in the expansion of the acquiring infrastructure, it added.

Deepak Chandnani, CEO, South Asia and ME, Worldline, said, “With the banks being asked to bear the burden of Zero MDR, their acquiring business profitability will be impacted. Further, it is likely that banks would, in turn, try to recover some of this from their non-bank fintech partners, thus negatively impacting all eco-system players, who are key to driving much needed growth of the acceptance and acquiring eco-system.”

Published on July 09, 2019

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.