Increase in MDR for QR code transactions, a step backwards: expert cautions

MDR FOR OR CODE TRANSACTIONS AT 0% IN SINGAPORE AND INDIA

- By NISHEL FERNANDO

A recent decision by the Central Bank (CB) to double the Merchant Discount Rate (MDR) for QR code transactions, raising it from 0.5 percent to 1 percent, has ignited strong criticism from a leading digital payments expert and former Central Banker.

Dr. Dharmasri Kumaratunga, who held key roles as a former Central Banker, Secretary of the Ministry of Technology, Telecommunications Regulatory Commission, and Chairman of ICTA, has voiced noteworthy opposition to the move.

Notably, he played a crucial role in overseeing digital payments at the CB, particularly during the tenure of former CB Governor Indrajith Coomaraswamy.

Dr. Kumaratunga currently serves as a Consultant at MasterCard and an Independent Director at Union Bank of Colombo.

In an interview with Mirror Business, Dr. Kumaratunga asserted that the MDR hike directly undermines the nation's ongoing efforts to promote digital payments and enhance financial inclusion, especially through the LankaQR national standard.

His comments underscore a perceived lack of proactive engagement from the CB in fostering LankaQR adoption in recent years.

"This increase in MDR is a step backward. We are striving to encourage merchants, particularly small businesses in rural areas, to embrace digital payments via QR codes. Imposing a higher charge will undoubtedly discourage their participation and impede the very objective of integrating the informal sector into the formal economy," he said.

Dr. Kumaratunga drew a stark contrast with the successful digital payment ecosystems in Singapore and India, where the MDR for QR code transactions stands at 0 percent.