Payment firms seek bigger UPI MDR share

Payment aggregators (PA) are negotiating with their sponsor banks for a larger share of the acquiring bank’s cut of the new merchant discount rate (MDR) on UPI transactions, with discussions centred on retaining 50-80% of the bank’s share, people aware of the matter said.

The negotiations are expected to be completed before the new MDR takes effect on October 15. Under the framework notified by the government and the National Payments Corporation of India (NPCI), merchants will pay an MDR of 0.4% on UPI transactions above Rs 2,000. Of this, 0.12% accrues to the acquiring bank, while the PA’s share has to be carved out of the bank’s portion.