Digital payments is a cash burning business, as it is linked to huge customer acquisition costs, low margins and pressure on profitability....
Digital payments is a cash burning business, as it is linked to huge customer acquisition costs, low margins and pressure on profitability. But despite that there is a huge competition in the segment as many companies feel that the game is worth playing, as it were. That is why Facebook has set much store by WhatsApp Pay. Google Pay and others too are not lagging behind.
Keeping the pressure on the competition, popular Indian payment gateway, Paytm, has announced that it will continue to offer UPI and Rupay card payments services to merchants at zero fees.
No additional charges on UPI transactions is expected to ensure that businesses have adequate liquidity for their expansion plans.
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Paytm's move comes in the backdrop of banks and digital payment platforms urging the Indian government to reconsider Merchant Discount Rate (MDR) on online transactions done via Unified Payments Interface (UPI) and RuPay debit cards which was waived in 2019.
MDR is charged on payments made to merchants through BHIM UPI platform and AePS (Aadhaar enabled Payment System). When payment is made at a merchant point of sale, MDR is payable by the trader to the bank.
MDR, it may be recalled, was removed by the Indian government for UPI and RuPay debit card transactions in 2019, to incentivise small merchants to adopt digital payment methods.
Paytm, for its part, is already absorbing Rs 600 crore in MDR charged annually by banks to support MSMEs (Micro, Small and Medium-sized Enterprises) during the ongoing pandemic.
In a media statement, a Paytm spokesperson said, "we believe that the decision of designating RuPay debit cards and the UPI as prescribed electronic modes of payments, against which banks and service providers cannot impose any charges will help in more adoption of digital payments."
The spokesperson added that Paytm will continue to follow all guidelines set by the authorities and help in the growth of online transactions. "With Paytm Payment Gateway, we are empowering businesses to easily digitise their business operations, without any investment in technology or backend infrastructure. Our services are providing the much-needed digitization support to businesses to improve their efficiency & supporting them to join the Digital India mission."
With Paytm, customers also have the choice to pay via the UPI app or bank accounts linked to Paytm UPI on the merchant payments page. The UPI feature from Paytm not only simplifies online payments for retail shops, service providers, or any other business but also enables merchants to authenticate and accept payments instantly.
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