‘Payment ecosystem needs to be viable'

Google Pay has cornered 37 per cent of all UPI transactions processed in the country last month. While digital transactions like UPI are generally free for customers, they incur costs for fintech firms and banks. SHARATH BULUSU, director of product management, Google Pay, explains to Ajinkya Kawale in a video interview the rationale for implementing a Merchant Discount Rate (MDR) for UPI and outlines the company's credit strategy.

-  SHARATH BULUSU

According to the Budget details, funding allocated to incentivise fintechs and banks for facilitating free Unified Payments Interface (UPI) transactions has decreased by 42 per cent compared to the previous year. What does this indicate? In the long run, the payments ecosystem has to be viable in a country of our scale. I think having a well-regulated marketbased mechanism to build a commercially viable business is important. We can debate and figure out different ways to do that. The most common model in the payments world is MDR, and there can be a combination of mechanisms.

Creating avenues to be able to build sustainable businesses is important because that is another way of reducing risk in the ecosystem. All the players are moving huge amounts of money on behalf of consumers, and merchants. It must be ensured that they can continue to invest and innovate to support new use cases.