New Delhi, September 16 (Daily Kiran) : The introduction of the Merchant Discount Rate (MDR) is set to significantly enhance the sustainability of the Unified Payments Interface (UPI) ecosystem, helping it reach one billion users. This assertion was made by fintech leaders in New Delhi on Wednesday.
In an interview with a news agency, Upasana Taku, co-founder, executive director, and CFO of Mobikwik, noted that UPI has been operational in India for over a decade, transforming the financial landscape. While it has facilitated access to financial products, the economic burden has largely fallen on financial companies and banks, as UPI transactions generate no revenue and have become a substantial part of their portfolios.
Currently, only about 500 to 600 million people are using UPI. Taku emphasized that achieving the goal of reaching one billion users within the next decade necessitates a stable income stream.
She further explained that the server cost for a single UPI transaction is approximately 17 to 20 paise. Additionally, maintaining the UPI platform requires a significant investment in engineering teams, risk management, and cybersecurity.
The government has been subsidizing only 10 percent of the total costs associated with UPI operations. The introduction of MDR is expected to help make the system more sustainable.
Bipin Preet Singh, co-founder, MD, and CEO of Mobikwik, stated that the UPI ecosystem has made India the world’s largest real-time payment system over the past decade. However, operating it incurs substantial costs. The implementation of MDR, applicable to transactions over ₹2,000, is anticipated to enhance the system’s sustainability, with no impact on small businesses or minor transactions.
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