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Payment gateway struggles to get MDR subsidies

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Digital transaction to touch 1.06 billion mark and the Indian fintech business is really very much exciting for the companies who come with the idea of action, and the fact is that, the payment gateway helping retailers and merchants with solutions around online payment processing, coupled with smartcard (loyalty) solutions. Government is pushing for digital India and digital transactions and it is real boost to the industry.

Among various sectors including travel and the education sector ,which are emerging a key vertical driving up volumes and value of transactions, especially with push from the HRD ministry, issued a directive to all colleges and universities to use digital payments to collect fees from the upcoming academic session. The payment gateways seen a large contributions from this sector given the fee-paying cycle.

Whenever anyone is setting up an ecommerce store or selling any digital products from their website ,they would require a payment gateway to accept payments from their customers. There are clear growth in the list of payment gateways in India to address the growing digital economy and Governments strong push towards it. Companies like CC Avenue, Citrus, PayU Money, Instamojo, Paytm and Mobikwik are prominent ones .
For promoting Government had come out with various schemes to promote digi payment with a subsidised scheme (Merchant Discount Rate (MDR), subsidy to make digital payments easier, has now become pain points for payment companies and banks with the delay in reimbursement, which is due from last December , to waive off all transactions feeof 0.4 per cent of the transaction value up to Rs. 2000 and reimburse banks, is still due, which is impacting their operations and the statics says, in last six months, above Rs. 2500 billion of debit card transactions took place and as per an estimate, total amount that government has to give away is Rs. 5-6 billion. The delay in reimbursement of subsidy, creates bottleneck to the fintech companies , by supporting their digital movement.

A report says, the scheme started in January 2018 and no payment has been made to payment aggregators such as BillDesk, PayU and CCAvenue, who in turn perform a crucial task for banks. The government has to pay on above mentioned per cent to banks instead of merchants. Here, banks will be responsible to pay all parties. However, SBI reported to have receive payments, but it is yet to distribute the payment to its partners.

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