Paytm founder supports zero MDR, says will accelerate digital payment acceptance

The Indian government proposal of abolishing merchant discount rate (MDR) has got a supporter in  Paytm founder and CEO Vijay Shekhar Sharma.

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, said Sharma in an interview to ET. 

He further said that Paytm’s model is built on zero MDR policy giving merchants an opportunity to sell online.

Earlier on July 5, the Union Budget proposed the abolition of MDR. Merchant Discount Rate is the 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.

Soon after the announcement, the move was criticised by banks and payment firms.

The decision might affect digital payments growth in the long run. It will hurt payment firms including banks and merchant onboard on them, they said. 

The Payment Council of India (PCI) also echoed the same voice against the move. 

It would lead to the whole digital payment industry without any business and revenue model,” said Naveen Surya, Chairman Emeritus, PCI.

Loney Antony, co-chairman of PCI emphasised that the govt should first suggest a commercial model for stakeholders.

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, he said.