SBI decided against Apple Pay tie-up, expects UPI MDR to offset infra costs: MD Rama Mohan Rao Amara

As per the latest business developments, State Bank of India (SBI) evaluated a potential partnership with Apple Pay but decided against participating in the ecosystem for now, Managing Director Rama Mohan Rao Amara told CNBC-TV18. He additionally noted that the upcoming 0.4% merchant discount rate (MDR) on Unified Payments Interface (UPI) transactions above ₹2,000 will help offset the bank's infrastructure costs rather than act as a topline generator.

Amara confirmed that SBI had an opportunity to evaluate Apple Pay before its tie-up with Axis Bank. "Yes, we had an opportunity to look at that and we looked at perhaps the commercials, etcetera. As of now, the call is not to participate in that ecosystem," Amara stated, describing the decision as a "considered call within the bank" that could change depending on future developments.

Addressing the new UPI MDR rules taking effect on October 15, Amara stated that SBI is technically prepared to operationalise the collection and distribution of the charges. He emphasised that 96% of person-to-merchant (P2M) transactions are up to Rs 2,000 and stay exempt, while customers are not supposed to pay any charge. He additionally stated certain essential-service payments, including fuel and railways, carry a flat MDR of Rs 5, while there is an upper cap of Rs 300 on transactions.

The new charges will help partly offset the "huge investments we are making in the infra, particularly beefing up the cyber security, taking a lot of risk management measures, strengthening the fraud, risk management," Amara explained. While SBI does not attribute a specific figure to its shared UPI infrastructure, he noted that industry estimates place the cost between Rs 15,000 crore and Rs 20,000 crore.

"We largely believe like it will offset the cost. So we are not looking at it as a topline generator as such," Amara stated. SBI at present has a 27% market share on the remitter side of UPI. Although its presence in merchant acquisition is smaller, Amara indicated that the small topline opportunity will encourage the bank to play a more active role across the value chain. He additionally stated the MDR would encourage further investments, particularly in innovation, to bring more value-further noted services to ecosystem partners.