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UPI MDR deferral unjustified as 95% of merchant payments face no impact: Abizer Diwanji

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UPI MDR deferral unjustified as 95% of merchant payments face no impact: Abizer Diwanji

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UPI MDR deferral unjustified as 95% of merchant payments face no impact: Abizer Diwanji

Abizer Diwanji, Founder of NeoStrat Advisors says the UPI MDR deferral has little economic justification, with limited impact on merchants and no hit to consumers.

The deferral of the proposed merchant discount rate (MDR) on Unified Payments Interface (UPI) merchant transactions has little economic justification as around 95% of payments would remain unaffected, according to Abizer Diwanji, Founder of NeoStrat Advisors. Diwanji said the impact on the remaining transactions would also be limited, with the maximum charge capped at ₹300. He argued that this would not lead to significant margin pressure for merchants and should not affect festive-season demand, especially as the cost cannot be passed on to consumers. “This is simply resistance to change,” Diwanji said, arguing that the proposed system would ultimately benefit merchants by helping improve the UPI ecosystem.

He also said there would be little administrative burden for merchants. According to Diwanji, UPI systems can automatically make the required deduction at the merchant level, meaning there should be no significant additional process for collections or payments. “UPI cannot have a payment and collection issue ever. They will make sure that that deduction happens at the merchant level almost automatically,” he said. Diwanji believes repeated delays could become a bigger concern if the MDR proposal gets pushed back indefinitely. He said the resources generated through the system would be important for improving UPI and making it more secure.


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