Payment firms revive push for MDR on high-value UPI merchant transactions above ₹2,000
With UPI clocking 22.72 billion transactions worth ₹28.92 trillion in June and government incentives shrinking to ₹2,000 crore for FY27 against an ₹8,000-10,000 crore annual cost, PhonePe, Google Pay and others are lobbying for a 15bps merchant fee on payments above ₹2,000, targeting the top 4-6% of merchants.
What happened
Payment firms revive push for limited MDR on high-value UPI merchant transactions above ₹2,000, citing rising costs and shrinking government incentives,
Key facts
- 22.72 billion transactions
- ₹28.92 trillion June
- 757 million/day
- 0.30% prior P2M MDR
- ₹2,000 crore FY27 incentive
- ₹8,000-10,000 crore annual cost
- top 4-6% merchants
- ₹2,000 threshold
- 15bps MDR
- $1 billion revenue
- P2M growth 24% YoY May 2026
Why this matters
A viable MDR framework on high-value UPI would reshape payments economics and could trigger consolidation or partnership plays among PhonePe, Google Pay and merchant-acquiring players—track regulatory signals for M&A timing.
What to watch
- Finance Ministry or RBI statement on MDR/zero-MDR policy
- FY27 budget allocation for UPI incentives (confirmation of ₹2,000 crore)
- NPCI circular on transaction tiering or merchant categorization
- Merchant body (CAIT, RAI) formal objections
- UPI monthly volume trend and any slowdown signals
- Movement in listed payment/fintech stocks on MDR headlines
- PhonePe/Google Pay/Paytm intensify joint lobbying via PCI (Payments Council of India) with cost-recovery data
- NPCI models revenue impact and merchant churn scenarios for a tiered MDR
- Government signals FY27 incentive ceiling to test market reaction
- Large merchants and RAI push back citing added transaction costs
- Fintechs accelerate credit-on-UPI and value-added monetization as MDR hedge