Indian banks want govt to restore merchant discounts on RuPay cards
The appeal comes as RuPay cards have been lagging behind Visa and Mastercard, primarily due to the absence of the Merchant Discount Rate (MDR).
Banks have made a fresh appeal to the government to reinstate merchant discounts on RuPay cards in a bid to boost its popularity and usage among traders and create a level playing field with international competitors.
The appeal comes as RuPay cards have been lagging behind Visa and Mastercard, primarily due to the absence of the Merchant Discount Rate (MDR).
The absence of MDR has limited the growth and attractiveness of RuPay cards in the market, as it hampers the ability to offer rewards, loyalty programs, and competitive features that are available with Visa and Mastercard.
Furthermore, payment service providers would also benefit from the reinstatement of MDR, allowing for increased revenue streams and investment in innovative payment solutions.
MDR is a fee charged to merchants for accepting card payments and its restoration on RuPay cards is crucial as it would encourage banks to promote RuPay as a preferred payment option.
Sources say, “By allowing MDR on RuPay debit card, banks will be encouraged to adopt it as a preferred card. Plus, merchant discounts will provide funds for investment to banks and payment service providers, which can be used for rewards, loyalty programmes and step up the customer experience.”
As per data available, RuPay, which is India’s homegrown card payment system has helped over 1200 banks to provide the facility of digital payments at grass roots level, including Cooperative Banks & Regional Rural Banks which were out of the electronic payment ecosystem.
By restoring MDR on RuPay cards, the government can foster an environment where RuPay becomes a more attractive and widely accepted payment method.
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