NPCI seeks greater UPI investment as operating costs reach ₹21,000 crore
NPCI CEO Dilip Asbe says banks and acquirers must invest more in UPI resilience as ecosystem costs rise. A proposed ₹3,000 crore fund could support merchant devices and expansion, while new MDR targets only large businesses and most small-merchant payments remain exempt.
What happened
NPCI CEO Dilip Asbe said UPI needs greater bank and acquirer investment to maintain resilience as costs rise. New MDR targets large businesses while most
Key facts
- ₹21,000 crore UPI operating cost
- 96% of UPI transaction value remains outside MDR
- 75% of merchants have no transaction above ₹2,000
- MDR applies to businesses with annual turnover above ₹1,000 crore
- Proposed UPI fund: around ₹3,000 crore
- 60 million active UPI merchants
- 35–40 million merchants use paper QR codes
- Target: 1 billion Indians on UPI
Why this matters
Target partnerships or acquisitions in merchant-device, acquiring, and payment-resilience platforms positioned to capture UPI’s infrastructure-led expansion without relying on broad MDR increases.
What to watch
- Formal NPCI, RBI, or government announcement of the proposed ₹3,000 crore fund, including eligible devices and merchant categories.
- Final MDR policy details: turnover thresholds, transaction caps, merchant-size definitions, and whether online marketplaces are included.
- Bank and acquirer capex commitments for UPI infrastructure, merchant support, fraud prevention, and offline payment capability.
- Growth in soundbox, smart-POS, NFC, and dynamic-QR deployment versus static QR expansion.
- UPI transaction failure-rate trends during festival, salary-day, and major e-commerce sale peaks.
- Merchant adoption of credit-on-UPI and its impact on acceptance economics and checkout conversion.
- Large retailers should model a potential MDR expense for UPI volumes above any proposed threshold and prepare acquiring-rate renegotiations.
- Retail chains should prioritize soundbox, dynamic QR, tap-to-pay, and integrated POS pilots in high-throughput stores where failed-payment reduction can justify device costs.
- Payment aggregators and acquirers should target underserved merchant clusters with bundled device, reconciliation, and working-capital offerings.
- Retail finance teams should increase monitoring of UPI failure rates, payment retry behavior, settlement timing, and cash fallback rates by store and region.
- Smaller merchants should expect continued low direct UPI acceptance costs but more offers for paid value-added devices and services.