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IIT-Bombay Proposes Reducing UPI MDR from 0.4% to 0.08%
A report from IIT-Bombay suggests reducing the Merchant Discount Rate (MDR) on UPI transactions from 0.4% to 0.08%. It argues banks should forgo their share due to substantial earnings from CASA deposits.
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What Happened?
A report from IIT-Bombay suggests reducing the Merchant Discount Rate (MDR) on UPI transactions from 0.4% to 0.08%. It argues banks should forgo their share due to substantial earnings from CASA deposits.
AI Quick Summary
IIT-Bombay proposes reducing UPI MDR to 0.08%, urging banks to use CASA earnings for UPI improvements.
Key points
- IIT-Bombay recommends reducing UPI MDR from 0.4% to 0.08%.
- Banks earned Rs 4.85 lakh crore from CASA deposits in FY26.
- The report suggests banks should set aside 3% of funds from lower interest earnings.
- It calls for treating UPI as an essential banking service.
- The report questions the reasonableness of high transaction charges on UPI.
Key insights
- Reducing MDR may enhance UPI adoption among merchants.
- Banks could reinvest CASA earnings into improving the UPI ecosystem.
- The proposed changes might lead to lower costs for consumers using UPI.
Why it matters
This proposal could significantly impact the cost structure of digital payments in India.
Source
Times of India
