As the economy picks up after the Omicron wave in the country subsides, merchants and small to medium business owners are seeing increased traction in online sales as delivery restrictions ebb and supplementary items are bought by customers. Generally, more sales equals more revenue and thus, more profits for any business owner. However, there is one element that always brings a little grief to business owners every time a transaction gets processed.
We’re talking about MDR, or Merchant Discount Rate, the fee charged by gateway companies to process the transaction between the user and business owner. By conventional estimates, business owners end up spending almost a lakh rupees per month on MDR. This not-so-insignificant amount can now be saved by simply switching to a new modern-day MDR that charges no transaction fees and allows you as a business owner to take the complete cost of your inventory with savings to the tune of INR 97,700 per month! Let’s find out how.
Understanding MDR –
As we’ve established earlier, MDR refers to the fees that a business incurs while accepting digital payments from its customers. So, if you’re selling an item that costs INR 1,000 and the payment gateway charges 1.8% (standard charges for using credit cards, debit cards and wallets), you only get INR 982 as the business owner with the remaining INR 18 being deducted by the payment gateway.
So far, paying MDR fees was considered an essential part of making online sales. That’s because there was no other alternative. However, one can now use UPI to reduce this cost significantly. To completely eliminate MDR fees, all you need to do is use Paytm’s payment gateway that gives your entire amount in your account without taking a single paisa as fees.
Let’s see how this would work with an example.
Comparison Between Various Payment Gateways –The most popular payment gateways include debit and credit cards, Netbanking, UPI and Online Wallets. Here’s how they would work with their payment gateway fees.
|Debit card (Rupay)||0%||2%||2%|
|Debit card (Others)||0.4%-0.9%||2%||2%|
|Paytm Wallet||1.99%||Not available||Not available|
As you can see, the average rate of MDR is around 2% of the total sale amount. This means that you only get 98% of the sale cost shown in your account if your customers use the options listed above.
However, if you look closely, you will see that Paytm Payment Gateway is one of the only payment gateways in India that enables UPI payments acceptance at zero cost since it has 0% MDR on UPI.
This means that when a customer makes a purchase of INR 1,000 through UPI, your business receives that entire amount if you use Paytm Payment Gateway to accept digital payments.
How You Can Save INR 97,700 Per Month
While 0% MDR sounds like music to your ears, here’s what makes it even better. As customers use Paytm Payment Gateway for more and more transactions, you save close to 2% on MDR fees each time.
Let’s understand how this will help you save INR 97,700 every month. We’re taking an assumption that your business has a monthly sales volume of INR 1 crore. The entire volume is generated through online payments and is split between credit cards, debit cards, Netbanking, UPI and Wallets.
Looking at the larger market trends in India right now, and UPI’s surge as a preferred payment mode, we’ve estimated 40% of the transactions to be through UPI.The two tables below show how much a business would pay as payment gateway charges to Paytm Payment Gateway and other payment gateways. Here is where it gets interesting.
|Charges Incurred On Paytm Payment Gateway|
|Payment mode||Transaction percentage split||Business volume (crores)||Paytm MDR||Charges (INR)|
|Charges incurred on other payment gateways|
|Payment mode||Transaction percentage split||Business volume (crores)||MDR||Charges (Rs)|
As you can see, if 40% of your consumers use UPI and you pay 2% MDR for each transaction, you would end up shelling out a lot more than if you used Paytm Payment Gateway with 0% MDR.
Any smart business person would immediately know what to do after seeing both these charts. Indeed, at a time when its necessary to show fiscal prudence in each and every aspect of business, having the option to save INR 97,700 is something you simply cannot afford to ignore. Indeed, it’s not just UPI, Paytm Payment Gateway offers 0% MDR on RuPay debit cards as well.
Other benefits include frictionless payment experiences for customers, highest encryption grade security to prevent fraudulent transactions, T+1 settlements even on bank holidays and weekends , support for 3000 transactions per second and industry-high success rates.
Think of Paytm Payment Gateway as an all-in-one package that manages transactions for your customers without charging any MDR to you whilst they pay with UPI or Rupay debit cards. How’s that for a win-win for everybody?For more details on Paytm PG, visit their Payment Gateway website.