Ever since this year budget proposed to abolish merchant discount rate below Rs 2,000 transactions, the digital payment firms and banks are in fix over the matter seeking more clarity on the issue.
Now with shunting out of the Finance Secretary Subhash Chandra Garg, the payment industry is planning to explain the issue afresh to a newly designated person.
Garg, who is now shifted to power secretary, was designated as Finance Secretary in four months ago. He held this post in addition to that of Secretary Economic Affairs, which he held since June 2017.
The banks and payment firms have keen on having this issue sorted out. They have reportedly written to the govt regarding the issue.
There has been confusion over modes of payment being included in this. The list of debit cards included- whether only Rupay card or all cards are also not clear.
On July 5, the Union Budget had proposed the abolition of MDR. It is basically a charge that merchants pay to the service providers of digital payments.
The budget proposed this to be applicable to businesses with a turnover of Rs 50 crore, which facilitate low-cost digital payment modes such as BHIM, UPI, QR code, Aadhaar Pay as well as certain debit cards, NEFT or RTGS transactions.
The move faced criticism from payment firms, who think this will lead to more job losses.
The decision might affect digital payments growth in the long run and it will hurt payment firms including banks and merchant onboard on them, banks said.
The Payment Council of India (PCI) also was critical of the move and said that the govt proposal will lead to the whole digital payment industry without any business and revenue model.
The payment body co-chairman said that govt first find an alternative commercial model for stakeholders as non-bank firms do not have any other avenue than the MDR.
However, Paytm founder and CEO Vijay Shekhar Sharma, in support of the move, said zero fees to merchants will lead to more acceptance of digital payments.
India’s acceptance of digital payment modes will accelerate with this kind of change on more payments options, Sharma said.