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Banks to Reinvest UPI MDR Gains into Technology and Security
Sentiment: NeutralHigh Priority
What Happened?
SBI, Axis Bank, and Bank of Baroda plan to reinvest proceeds from the UPI MDR levy into technology, security, and merchant expansion rather than boosting profits. The implementation date for the MDR is still pending.
Key points
- The proposed MDR is set at 0.40% for UPI transactions above ₹2,000.
- Banks aim to use MDR proceeds to enhance UPI technology and security.
- The National Payments Corporation of India deferred the MDR implementation until after Diwali.
- SBI Chairman C S Setty emphasized that MDR should not be viewed as a revenue stream.
- Axis Bank's Arnika Dixit stated the bank will use part of the MDR revenue to expand its merchant footprint.
Key insights
- Reinvesting MDR proceeds may lead to improved user trust in digital transactions.
- Strengthening UPI infrastructure could attract more merchants to the platform.
- The delay in MDR implementation may affect banks' revenue expectations.
Why it matters
The decision could enhance the UPI ecosystem's technological capabilities and security.
Entities
SBI· OrganizationAxis Bank· OrganizationBank of Baroda· OrganizationNational Payments Corporation of India· Organization
Source
Business Standard
