MobiKwik co-founder renews call for UPI MDR to fund payments infrastructure
MobiKwik co-founder Upasana Taku said government subsidies covered only 10–15% of payment companies’ costs, arguing that MDR is needed to support transaction processing, fraud prevention, cybersecurity and long-term innovation across India’s UPI ecosystem.
What happened
Mobikwik · MobiKwik co-founder Upasana Taku said UPI subsidies covered only 10-15% of payment companies’ costs, backing MDR charges to fund transaction
Key facts
- UPI subsidy covered 10-15% of payment companies' costs
- Server cost per transaction is around 20 paise
- UPI subsidy was received for the last two years
- Several UPI services will remain free after October 15
- Investment needs extend over the next 10 years
Why this matters
A potential MDR framework could reshape payments economics and make infrastructure, fraud-tech and merchant-acquiring partnerships or acquisitions more strategically valuable.
What to watch
- Union Budget or Ministry of Finance announcements on UPI incentive-scheme funding and payout methodology.
- RBI, NPCI or government consultation language distinguishing P2P, P2M, small-merchant, large-merchant and credit-on-UPI pricing.
- Evidence that subsidy disbursements rise above current cost coverage or become linked to transaction economics.
- New merchant-facing fees framed as software, device, settlement, fraud-prevention or premium acceptance services rather than MDR.
- UPI transaction growth outpacing incentive allocations, rising fraud incidents, or public reductions in cashback and merchant-acquisition programs.
- Policy changes affecting credit card on UPI, prepaid instruments, cross-border UPI or business payments, which could become initial monetisable segments.
- Payment companies and industry bodies increase lobbying around UPI subsidy adequacy, emphasizing fraud losses, cybersecurity spending and infrastructure costs.
- Fintechs accelerate monetisation of adjacent services such as merchant subscriptions, soundboxes, credit-on-UPI, payment gateways, reconciliation tools and lending.
- Large merchants may push for clearer economics if providers begin charging separately for value-added acceptance, settlement or fraud-management services.
- Banks and PSPs may seek differentiated incentives for high-volume, low-ticket and rural transactions, where processing costs are least covered by current support.
- NPCI ecosystem participants may tighten fraud controls and selectively ration costly incentives if reimbursement uncertainty persists.