IAS Gyan

Daily News Analysis


12th January, 2023 Economy

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  • The Union Cabinet approved an outlay of ₹2,600 crore to promote payments using RuPay cards and the Unified Payments Interface (UPI).


  • The fund will be paid to banks in view of the lack of a Merchant Discount Rate (MDR) — a commission on digital transactions — for UPI and RuPay transactions. 
  • There have been complaints from the Reserve Bank of India (RBI) and banks, as there is a lack of financial sustainability of building digital payments infrastructure in the absence of payments needed to scale and maintain them.


A merchant discount rate, or MDR, is a rate charged to a merchant for the payment processing of debit and credit card transactions. The merchant discount rate is also referred to as the transaction discount rate (TDR). MDR is given as a percentage of each sales transaction processed.

Significance if the Incentive Scheme:

  • Total digital payments transactions have registered a year-on-year growth of 59%, rising from [₹]5,554 crore in FY2020-21 to [₹]8,840 crore in FY2021-22.”
  • This recent Incentive Scheme will also promote UPI Lite and UPI 123PAY as economical and user-friendly digital payments solutions and enable further deepening of digital payments in the country.

Digital Payments in India:

  • India since independence has remained a cash dependent economy. India’s cash to GDP ratio is 13 % whereas the global average is a maximum of 8%.
  • The Indian government has been trying to go cashless to counter problems like illegal transactions, money laundering, black money ete. Demonetization was a big step towards going cashless and getting transactions digitized.
  • Since then there has been a big shift and today we can see hawkers and tea-sellers accepting digital payments in many parts of India. Each month records Billions of transactions on NPCI’s UPI platform.

Must Read: https://www.iasgyan.in/air-summaries/air-discussions-january-1st-week-23

Cashless Economy: https://iasgyan.in/ig-uploads/pdf/480934.pdf

Patments Vision 2025: https://www.iasgyan.in/daily-current-affairs/payments-vision-2025