Thread by @artijourno

Since #zeroMDR is the talk of the town now, here are some thoughts on how these decisions are impacting NPCI:

- IBA has asked NPCI to scrap switching fees. The argument seems fair because if banks/fintech cos are not earning anything, they would definitely mind paying any fee to NPCI or any entity

- In the name of promotion, the govt is actually killing UPI, Rupay. UPI no longer needs promotion. A case in point: Razorpay's PG biz saw UPI (as payment mode) contributing 38% to total txns as compared to Debit/Credit Cards (46%) in 2019. In 2020, UPI will overtake cards

- If there is no incentive on UPI and Rupay, fintech cos and even NPCI will be reluctant to invest in improving the network. Chances are UPI might end up acting like a 'sarkari' payment pipe and remain in its current form forever, since there will be no incentive to upgrade it.

- Rupay is yet to come out of the 'Jandhan' tag, thanks to the govt's 'aggressive' push...I doubt if Indian merchants will promote one card over the other just bcoz they are saving MDR on one.

Promoting a payments instrument is one thing, but incentivising a brand of cards may not be something merchants would want to get into. It would be a fight between banks and merchants, and chances of banks winning this game are significantly higher.

- Other card networks may also be asked to go for zero MDR - this can turn out to be a geopolitical issue. However, Visa and MasterCard have already started diversifying and looking for other revenue channels, and we could see several acquisitions/investments on these lines.

But, NPCI doesn't have that option as well, since the govt is the one taking decisions for this Sec 8 company.

- On the face of it, the govt incentivising UPI and forcing adoption of Rupay among banks might look like it is promoting NPCI and its products, but in reality the 'power-less' NPCI is being seen as the villain of the piece.

- Ending note: If the govt does have so much power and control over NPCI, then it should not mind bringing NPCI under the purview of #RTI. #fintech #payments #zeroMDR

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