MUMBAI: India's payment industry has long been calling for higher subsidies or a controlled introduction of merchant discount rate (MDR) to recover transaction costs. The decision to allow MDR or higher value business payments will help to turn many business models sustainable and thereby increase competition in an industry that is currently a near duopoly of PhonePe and Google Pay.

ET was the first to report on July 16 that the government could reintroduce MDR on UPI transactions for large merchants. This has been an issue plaguing the online payments…

Proposed amendments to the Payment and Settlement Systems Act may bring back merchant discount rates. This move could help banks and fintech firms recover technology and…