New Delhi, July 8 -- Merchant discount rate (MDR) should be applied to UPI transactions, particularly for large merchants such as Eternal and Policybazaar, as the current zero-MDR regime is financially unsustainable for banks and payment companies, said Upasana Taku, co-founder of One MobiKwik Systems Ltd.

Merchant discount rate is the fee merchants pay to banks and payment service providers for processing digital payments. The government removed MDR in January 2020 to accelerate the adoption of digital payments across the country. Earlier, the central bank permitted an MDR of up to 0.90% of the transaction value for debit card payments, while the National Payments Corporation of India (NPCI) allowed an MDR of up to 0.30% for UPI person-...