Garg was named power secretary in an order late on Wednesday.
“There was a meeting that was supposed to happen with the economic affairs secretary in the first week of August; now that there will be a new person at the top we will have to reach out to him afresh and explain the position of the industry on the MDR issue again,” a top executive of the payments industry said on the condition of anonymity.
MDR is the rate merchants pay to banks and service providers for the digital payments facilities that they enjoy. The Indian Banks’ Association had sent a letter on the matter as well, bankers pointed out. IBA chief executive VG Kannan could not be reached for comment. An email sent to his official email address remained unanswered till the time of going to press.
“There have been multiple communications that have gone from industry bodies regarding the matter, but the zero MDR move will be a major dampener since banks are not going to absorb the cost of deploying payment terminals,” said a senior banker with a private sector lender.
The Payments Council of India, which represents more than 100 payments companies, did not respond to an email till press time.
The Finance Bill says clearly that no bank or system provider shall charge anyone directly or indirectly for using electronic payment modes, but the modes of such payment have not been clarified. Industry players are waiting to find out how exactly Section 269SU of the Income Tax Act, 1961 will spell out the electronic modes of payments.
“While the minister in her budget speech mentioned certain debit cards, what exactly is included in this list is not clear yet, is it only RuPay debit cards or all debit cards is the big question,” said the payment executive quoted above.
Some are of the view that if only Rupay debit cards attract zero MDR, banks will simply go in for Visa and Mastercard since they will make some money per transaction. Others say the government could soon clarify that zero MDR applies only for smartphone or Aadhaar-based payments, which are asset-light in comparison to card payments.
The payments industry has faced multiple regulatory challenges, starting with full KYC requirements for wallet players to zero MDR for transactions below Rs 2000 and mandatory data localisation norms for all companies offering payment services.
The latest move could cause massive job losses, industry players said. “These PSPs are employing at least several lakh people, and in the absence of revenue, there will be survival issues and the industry will eventually collapse,” Loney Antony, vice-chairman, Hitachi Payments said earlier.