Banks approve reduced fees for UPI, RuPay

The Banks will not charge a part of the fees on Unified Payments Interface (UPI) and RuPay card transactions as long as the merchant discount rate (MDR) remains zero following the government announcement. NPCI to removes multiple charges like interchange fees, payments service provider (PSP) fee, and switching fees.

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A bank, which used to get MDR from merchants for facilitating the payments, would pay interchange fees to the issuer bank and then pay a switching fee to the network NPCI along with a price to PSPs like PhonePe or Google-Pay. Most banks have stopped ATM expansion and might also allocate less money towards POS (point-of-sale) expansion. The MDR becoming zero, it was inevitable that the interchange fee also becomes zero, industry experts.