While the latest guidelines of RBI (Reserve Bank of India) on MDR (merchant discount rates) have conveyed some break to the sector of digital transactions, many executives of the industry spoke to feel that the central bank requires to make sure evenhanded distribution of MDR among the different members of digital payments.
MDR is the amount given by a vendor for a digital payment and it is distributed by various parties such as the obtaining bank which on-boards the vendor, the bank which issues the card, the players who set up the payment solution, and the network firms who carry out the payments. As of now, the amount of MDR is much more for the issuing body while the obtaining firm gets a much minute share. In addition, with the latest rates from the watchdog, payment firms fear that their profits might be under additional stress.
“While the utmost limit on MDR has been determined by the RBI, what requires to be carried out is that the relation of split between the issuing entity and the acquiring company requires to be determined in such a method that there is an equilibrium and the main deployers can generate some profit from the trade,” claimed cofounder of Billdesk, MN Srinivasu, to the media in an interview. Billdesk is one of the biggest payment gateway firms in the nation.
“The financial model for organizations that deploy the transaction terminals is very strict. In some cases, it is less than 0.1%. This hinders growth of transactions in smaller towns,” claimed managing director of PayU India, Amrish Rau, to the media in an interview. PayU India is a digital payment company. Founder of payment gateway firm CCAvenue, Vishwas Patel, claimed that the nation already has over 800 Million debit cards. Now, CCAvenue is a payment gateway firm.