Several Founders, Co-Founders, CXO Bankers, CXO Fintech professional & people who participated in the ePanel discussions:
- Mr. Manish Khera, Founder & MD, Arth Impact (HAPPY)
- Mr. Sanjay Swamy, Managing Partner & Co-Founder, PRIME Venture Partners
- Mr. Vishwas Patel, Director Infibeam Avenues Limited, Founder CCAvenue Payment Gateway
- Mr. Sunil Kulkarni, Joint Managing Director, Oxigen Services (India) Pvt Ltd
- Mr. Vijay Shekhar Sharma, Founder & CEO, Paytm
- Mr. Dilip Asbe, Managing Director & CEO, NPCI
- Mr. Manian KVS, President- Corporate & Investment Bank at Kotak Mahindra Bank
- Mr. Srinivasu MN, Co-Founder, Bill Desk
- Mr. Vaibhav Lodha, Co-founder, FTcash
- Mr. Rishi Gupta, MD & CEO, Fino Payments Bank
- Mr. Nagaraj Mylandla, Chairman & Managing Director, FSS
- Mr. Taron Mohan, CEO & Promoter, NextGen Telesolutions Pvt Ltd
- Mr. Narayan Rao, Chief Services Officer, Suryoday Small Finance Bank
- Mr. Naveen Surya, Chairman (Non-Executive), Fintech Convergence Council
- Mr. Prasad Likhite, Director Sales, ACI Worldwide
- Mr. Kamonasish Aayush Mazumdar, Founder & CEO at Foodieverse
- Mr. Shirsha Ghosh, Co-Founder Torit Innovations
- Mr. Jaideep Pawar, Associate Director- Sales, Euronet Worldwide
- Mr. Ashvini Kumar Dave, Vice President- Business Solutions Group – Payments
- Mr. Jolly Zachariah, Head of Channels at Ujjivan Small Finance Bank Limited
- Mr. Shashank Chowdhury, Former Managing Director -India, Infinite Zero OR Independent Consultant
- Ms. Saru Kaushal, Institutional Partnerships & Strategy, INDWealth.in
- Mr. Anupam Varghese, Chief Tinkerer, Tinkerbee Innovations
- Mr. Shekhar Desai, CEO, Thane Bharat Sahakari Bank Ltd
- Mr. Vikas Pahwa, Vice President Transaction Banking, Citi
- Mr. Sandeep Todi, Co-Founder & CBO, Remitr
- Mr. Sharad Goklani, CTO at Equitas Small Finance Bank
- Mr. Anand Bajaj, Founder & CEO, Nearby Technologies Private Ltd
- Mr. Vikram Kaushal, Managing Partner– Vardhan Ceqube India Investment fund
- Mr. Hemal Shah, Technical Product Manager, Mastercard
- Mr. Abhishek Arun, Senior Vice President, Paytm
- Mr. Vishweshwaran R, Vice President-Business Technology Group at IDFC FIRST Bank
- Mr. Vineet Tiwari, Crescent Payments Pvt Ltd
- Mr. Shubhrant Singh, Co-Founder, UnoXact Digital Solutions & Technologies Pvt Ltd
- Mr. Atish Shelar, Head – Acquisition/Business Development, Indiaideas.com Ltd.
- Mr. Anil Shenoy, Director and Risk Management, First Data Corporation
- Mr. Neeraj Chandra, Head of Operations and Technology, Abu Dhabi Commercial Bank
- Mr. Karran Nair, Assistant Vice President at HDFC Bank
- Mr. Vikas R Panditrao, Co-Founder, Forum of Industry and Academic Knowledge Sharing (FIAKS)
- Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum requested to remain anonymous
Finance Minister Nirmala Sitharaman declared ‘Zero MDR’ that is from January 1, 2020, onwards no MDR charges shall be applicable on payment via Rupay, UPI [1]
This bespoke will enlighten upon several questions put forth by the FIAKS community regarding Zero MDR one by one.
Question 1: Does this seem to be the right way to promote digital payment?
Question 2: Isn’t this wrong that the government is interfering in the commercial arrangements that are dealt with by RBI?
Question 3: So what happens to the “patent” of UPI QR in POS now?
Question 4: What would be the business model of IRCTC (Indian Railway Catering and Tourism)?
Question 5: How come this zero MDR does not apply to FASTag?
Question 6: Isn’t zero MDR a fictitious construct?
Also an exhaustive list of several questions raised by top industry leaders which regulator needs to have an eye on.
Firstly, let’s have a summary of what is MDR (Merchant Discount Rate)? Every time a customer uses his debit or credit card for making payments, the merchant incurs a fee that they have to give to the bank providing the debit/credit card. The MDR is in a certain percentage of the transaction amount. In simple terms, it is a transaction cost charged by the bank and paid by the merchant. The customer does not have to bear it except for some merchants still pass the MDR to the customer.
Now check what the section specifies -“119AA. Modes of payment for the purpose of section 269SU.- Every person, carrying on business, if his total sales, turnover or gross receipts, as the case may be, in business exceeds fifty crore rupees during the immediately preceding previous year shall provide the facility for accepting payment through following electronic modes, in addition to the facility for other electronic modes of payment, if any, being provided by such person, namely:-
(i) Debit Card powered by RuPay;
(ii) Unified Payments Interface (UPI) (BHIM-UPI); and
(iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code).” [2]
“Department of Revenue (DoR) will notify RuPay and UPI as the prescribed mode of payment for undertaking digital transactions without any MDR. Accordingly, all companies with a turnover of ₹50 crores or more shall be mandated by DoR to provide the facility of payment through RuPay Debit card and UPI QR code to their customers,” the finance ministry said in a statement. [1]
Question 1: Does this seem to be the right way to promote digital payment?
- While some argue it’s just a promotion of RuPay as merchants will start accepting only RuPay cards. Ultimately, a POS machine will be optimum for RuPay and UPI.
- We never questioned free NEFT, free recharges, free delivery. Also when China Union Pay was launched no one questioned, if it wasn’t for democracy we would have been mandated to accept only RuPay as happened in China.
- If everything is free then who will invest when returns are zero. It will have an impact on the overall ecosystem. The zero MDR concept will lead to being counter-productive in the long run. Making Internet free, telecom free will make digitization easier too. Anything with value comes at a cost and if there is no incentive in digital payments why would anyone invest in making it safe secure and efficient? Without investment, systems will be vulnerable to fraud.
- It is to be remembered that we are in a commercial world. It’s important to create business models. Anything free is not valued, it’s taken for granted and then it destroys investor value and people take shortcuts of monetizing data. Nothing is free and when you get anything free, then be prepared because you, your data, your behavior, your information is the price.
- Another concern being who will invest in the technology required in UPI. In the Indian payments industry, there is no innovation in technology. No one has brought in tech to bring about a change in the way the services work or to focus on an untapped segment. All we are seeing is cashback, wallets or a copy from what exists elsewhere. Bring about new technology in the way the services work. That’s the way to expand the market!
Question 2: Isn’t this wrong that the government is interfering in the commercial arrangements that are dealt with by RBI?
- A member opines that digital payments so far have shown exponential growth all due to demonetization, UPI platform, significant VC plus Chinese, Japanese, American Investment in payments and finally brave Indian entrepreneurship. Now by taking a position of pricing the government essentially is signaling that we are not a market economy. This is an ominous sign for global Investors. Even for onions, the government imported and reduced prices. Here for payments, the government is just interfering without investing.
- When the government becomes a player, rule maker and regulator all rolled into one, there is a huge conflict of interest and distortion of market forces. There will be little selling power or incentive left for other players and they will whittle down their activities slowly. As with many other policies of this government, short term gains drive decisions with scant consideration for long term repercussions.
Following are some recommendations put forth by community members that the government could consider for digital adoption:
Register and read the complete discussions