UPI MDR framework needs rationalisation to protect public trust: Report

Proposed merchant discount rate (MDR) framework for Unified Payments Interface (UPI) transactions needs to be rationalised before implementation to protect public trust in the digital payments system, according to a report.

UPI, a public digital infrastructure, has generated significant convenience for users and productivity gains for the economy, with its long-term economic benefits outweighing the incremental income that could accrue from merchant transaction fees, the report titled 'UPI at a Crossroads: Reintroducing the MDR' released by IIT Bombay said.

It cautioned that public trust in UPI could be undermined if the proposed MDR framework is implemented in its present form, stressing the need to ensure that the digital payments platform does not attract negative sentiment among users.

The report suggested that merchants with annual turnover of Rs 50 crore or more are mandated by law to provide UPI as a means for accepting payments.

Accordingly, the remuneration for the UPI ...