NPCI says 0.4% UPI MDR could recover up to Rs 15,000 crore in year one
NPCI chief Dilip Asbe said a proposed 0.4% UPI merchant discount rate could generate Rs 13,000-15,000 crore in its first year, largely from bigger merchants. NPCI also outlined a small-merchant fund and plans for agentic payments.
What happened
National Payments Corporation of India (NPCI) · NPCI says a proposed 0.4% UPI MDR could recover Rs 13,000-15,000 crore in year one, mainly from large merchants.
Key facts
- 0.4% proposed UPI merchant discount rate
- Rs 13,000-15,000 crore potential first-year MDR recovery
- Rs 21,000 crore estimated annual payment-system cost
- 80% of MDR pool from merchants already accepting credit cards
- 5% of MDR collections for small-merchant fund
What changed
NPCI says a proposed 0.4% UPI MDR could recover Rs 13,000-15,000 crore in year one, mainly from large merchants. It also plans agentic payments and a small-merchant fund to support payment acceptance and retailer discovery.
Why this matters
A proposed 0.4% UPI MDR would raise payment-acceptance costs mainly for larger merchants, making checkout economics, routing and surcharge-free margin management more important while potentially funding small-merchant infrastructure.
What to watch
- Finance Ministry, RBI or NPCI consultation language specifying whether the 0.4% rate is a proposal, a ceiling, or an approved tariff.
- Definitions of exempt small merchants, including turnover thresholds, QR-code categories, transaction caps and whether marketplaces aggregate seller volume.
- Who bears the charge: merchant, acquirer, issuer, PSP, consumer, or a mix; also whether GST applies to the fee.
- Government budget allocations or continuation of UPI incentive subsidies, which would indicate whether public funding can substitute for MDR.
- Large retailer, e-commerce and food-delivery platform responses, including checkout steering, convenience-fee experiments or payment-method incentives.