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Our read

UPI is likely to see any MDR cut on payments above ₹2,000 debated for months before it takes effect.

For operators

September retail inflation of 5.54%, driven by onion, ginger and garlic, is squeezing household kitchen budgets, so watch basket sizes and discretionary spend, and treat the IIT Bombay proposal to lower UPI MDR on payments above ₹2,000 as a possible but still pending cut in your acceptance costs.

Watch

A formal notice on lower UPI MDR above ₹2,000 before the Union Budget would mean the IIT Bombay proposal is live, easing merchant costs and squeezing payment firms.

The report: India's retail inflation rises to 5.54% in September; IIT Bombay report urges lower UPI MDR on payments above ₹2,000

India's retail inflation rose to 5.54% in September, with onion, ginger and garlic prices jumping. An IIT Bombay report separately recommended cutting the MDR on UPI payments above ₹2,000, which could affect merchants and digital payment firms.

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Signals to track

  • Retail inflation in the October print compared with September's 5.54%
  • Onion, ginger and garlic price trend in wholesale markets
  • Public response of banks and payment firms to the MDR proposal
  • Large merchants' stance on charges for UPI payments above ₹2,000

Likely next moves

Our read of what comes next — analysis, not reported by the source.

  • Banks and payment firms are likely to argue against any MDR cut on payments above ₹2,000, citing the cost of running the payment rails.
  • Large merchants and trade bodies may back the IIT Bombay proposal, since higher-value payments carry the biggest charges for them.
  • The government and payments regulator are likely to consult industry before acting, so any rule change would probably arrive slowly.
  • Households are likely to keep trimming discretionary spending while onion, ginger and garlic prices hold September's retail inflation at 5.54%.
  • Payment firms may lean harder on value-added services as a revenue hedge if a lower MDR looks likely.

The source

Source Read the source at Business Today

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