Business · India Bureau
RBI Deputy Governor dismisses fears of cash surge from UPI MDR
Concerns that a merchant discount rate on UPI transactions would drive consumers back to cash are unfounded, according to RBI Deputy Governor Shirish Chandra Murmu. The official characterised such worries as merely an "initial apprehension" that would not materialise in practice.
LSN India ·
The Reserve Bank of India's Deputy Governor on Friday sought to allay concerns that the introduction of merchant charges on digital payments would reverse India's shift toward cashless transactions. Shirish Chandra Murmu dismissed predictions of a surge in cash usage following the implementation of a 0.4 per cent Merchant Discount Rate (MDR) on person-to-merchant UPI payments above Rs 2,000, terming such apprehensions as temporary rather than substantive.
"I don't think that apprehension will come true. It will be just initial apprehension," Murmu said while addressing a financial market conclave organised by the Bengal Chamber of Commerce and Industry. The RBI official acknowledged that the shift in cost recovery mechanisms might naturally prompt initial concerns, but expressed confidence that the measure would not significantly impact payment behaviour.
Beginning October 15, merchants will bear a maximum charge of Rs 300 for UPI transactions of Rs 75,000 or above. However, person-to-person payments and the overwhelming majority of everyday merchant transactions will remain free, maintaining the accessibility that has driven UPI's rapid adoption across India. Murmu suggested that these exemptions would be sufficient to preserve consumer preference for digital payments despite the merchant-level charges.