The government will spend up to Rs 1,500 crore in the coming year to incentivise digital payments adoption in the country, Finance Minister Nirmala Sitharaman announced as part of the Union Budget Speech for 2021-22. Sitharaman also said that the government will establish a Fintech hub at the International Financial Services Centre in Gift City, Gujarat. "There has been a manifold increase in digital payments in the recent past. To give a further boost to digital transactions, I earmark Rs 1,500 crore for a proposed scheme that will provide financial incentive to promote digital modes of payment," she said. Last year, the government removed the merchant-discount-rate (MDR) on Unified Payments Interface (UPI) and RuPay debit card transactions for businesses with a turnover of over Rs 50 crore. MDR is the fee paid to banks and payment service providers by merchants, typically around 1.5-2% the transaction value. This led to payment companies and apps, that provide UPI payments services, bearing the cost of processing transactions and physical infrastructure expansion as it could not be passed onto consumers or merchants. Over time the MDR for digital payments, debit card and credit card transactions has been reducing through the government or the Reserve Bank of India's measures. While the government's decision that businesses could not levy MDR on UPI and RuPay cards did not spoil the rush of new users towards digital payment apps and platforms in the last year, be it consumers or merchants, payment companies have continued to burn cash on…
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