While Aadhaar-based merchant payments will take a few more weeks to truly take off, 15-20% of transaction volume on the United Payments Interface (UPI) channel is already coming from merchants, Dilip Asbe, chief operating officer, National Payments Corporation of India (NPCI), told Shritama Bose. Edited excerpts:
How have Aadhaar-enabled merchant payments been doing?
We have made Aadhaar-based merchant payments available for around 35 banks, and the banks are in the process of certifying with the UIDAI’s (Unique Identification Authority of India) guidelines, which is the registered devices guidelines, and we expect that banks will be able to start the deployment sometime during the next month.
I understand that there are already pilots happening on the latest guidelines, which have been issued by the UIDAI. That’s where the work is in progress.
When this was launched on April 14, we were told seven lakh merchants had been acquired. Has that number gone up?
What happens is that merchants have been acquired. Now, the devices have to be supplied. That is where the work is in progress. So the banks, NPCI and all of us are upgrading our systems to connect to the UIDAI on the revised specifications. I think in the next few weeks, you will see a lot of action in the field.
Has UPI gained traction with merchants?
About 15-20% of the daily volume in UPI is coming from the merchant side. IRCTC (Indian Railway Catering and Tourism Corporation), Redbus, Flipkart and Paytm are among the ones who accept the UPI. We are trying to talk to merchants to get more and more UPI acceptance. We have to still cover top 300 merchants on the UPI to offer UPI payments, which I expect we will be able in the next two to three months.
What has been the progress with smaller merchants?
There are a couple of aggregators which are doing it for small merchants. In fact, banks are also on-boarding them. Benow and Razorpay are also working with the NPCI and banks to acquire merchants.
What’s the update on BharatQR?
There are already a few lakh merchants for whom BharatQR has been rolled out. About 12 to 15 banks have changed their apps to accept BharatQR. That is work in progress because we require at least 20-25 banks from the issuance standpoint so that there is a large customer base which can use BharatQR. But a majority of the acquiring banks are already live.
What is the MDR regime for UPI and Aadhaar-based merchant payments?
For UPI, the MDR is 25 basis points (bps) for transactions up to Rs 2,000 and 65 bps above that. About 90% transactions are below Rs 2,000. Most of the transactions would be covered under the 25 bps MDR. For Aadhaar Pay, 25 bps is the MDR. However, there are some discussions going on that it could be reimbursed by the government for a certain period of time since this is predominantly for assisted mode and rural market.
The global practice is to regulate interchange as issuers invest more to enable digital transactions while the MDR is adjusted accordingly. Has there been any thinking on switching to that?
There are costs on the acquiring side and on the issuing side. So, I personally feel the RBI has done the right thing by regulating MDR, because MDR is funding the entire cost to the ecosystem both on the acquiring as well as the issuing side. On the acquirers side, it includes terminal deployment, merchant acquisition, merchant training, merchant risk and merchant dispute management. On the issuers side, it includes customer education, on-boarding of the customer on to the digital platform, customer servicing, customer risk, etc. So, I feel MDR regulation is the right way which is done by the RBI.