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SBI and NPCI recommendations on Rupay Card

Published on January 05, 2020
Current context: State Bank of India (SBI) and National Payment Corporation of India (NPCI) have asked the government for compensation for the revenue loss made on Rupay Card and suggested some measures for parity.
SBI and NPCI recommendations on Rupay Card
  • The issue arising out of the 30th December 19 notification making RuPay and UPI zero-cost are:
    1. The worry of SBI and other state-run banks who are the main issuers of the RuPay card is that the government decision to scrap the processing charge on transactions with the card would cause them a revenue loss.
    2. NPCI is concerned that the action would disincentivise banks to issue RuPay cards and they would instead prefer international rivals of the home-grown payment gateway.
    3. Zero MDR would disincentivise banks to issue RuPay cards and they would instead prefer Visa and Mastercard.
    4. This will impact future investments in the sector and kill business models of Fintech companies.
  • The recommendations put forward by SBI and NPCI include:
    1. SBI wants zero MDR for all, including international players.
    2. SBI Seeks state-sponsored subsidies for deployment of payment infrastructure in remote localities.
    3. NPCI asks government to keep RuPay out of zero-MDR scheme.
    4. NPCI seeks a mechanism to compensate banks for UPI transaction losses.
  • The NPCI has estimated that, if the government were to compensate for the revenue loss on both RuPay and UPI, the support could be about Rs 2,000 crore for FY21.
  • Merchant Discount Rate is the fee accrued by banks, and is generally levied from the merchants processing the debit and credit card transactions.


Q.1 The merchant discount rate is the rate charged to a merchant for payment processing services on? 
  1. Debit card transactions
  2. Credit card transactions
a. 1 only
b. 2 only
c. Both 1 and 2
d. None of the above
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