India opens door to UPI merchant fees, putting large retailers in focus
Proposed payments-law changes could allow a 0.3%-0.5% merchant discount rate on UPI for larger merchants or transactions above Rs 2,000. Fee levels and applicability remain undecided, but the shift could create a Rs 50 billion-Rs 100 billion industry revenue pool.
What happened
Unified Payments Interface (UPI) · India tabled payments-law changes that could enable merchant fees on UPI. Policymakers are considering a 0.3%-0.5% MDR for
Key facts
- 23.6 billion UPI transactions in July
- Rs 29.9 trillion UPI transaction value in July
- 1.5% typical credit-card MDR
- Up to 0.9% debit-card MDR
- Proposed 0.3%-0.5% MDR
- Rs 2,000 proposed transaction threshold
- Rs 15 million proposed annual merchant-turnover threshold
- 4% of merchant payment volumes are above Rs 2,000
- 67% of transaction value is above Rs 2,000
- Rs 50 billion-Rs 100 billion estimated payments-industry revenue pool
Why this matters
The proposed framework could increase the strategic value of acquiring or partnering with payment gateways, issuer-acquirers, and merchant-fintech platforms that can monetize large-retailer UPI flows.