PhonePe CEO backs proposed 0.4% UPI MDR above ₹2,000
PhonePe CEO Sameer Nigam says a proposed 0.4% merchant discount rate on UPI payments above ₹2,000 could fund network operations and expansion, while an estimated 96% of UPI transactions would remain free.
What happened
PhonePe CEO Sameer Nigam backs a proposed UPI MDR framework, with a 0.4% charge on merchant payments above ₹2,000. He says most transactions will remain free
Key facts
- 96% of UPI transactions expected to remain free
- ₹2,000 transaction threshold
- 0.4% MDR on merchant UPI transactions above ₹2,000
Why this matters
The proposed fee strengthens the strategic value of partnerships or acquisitions tied to UPI routing, merchant acquiring, and payment-operations infrastructure.
What to watch
- Ministry of Finance, RBI or NPCI consultation paper, notification, or budget reference to UPI cost recovery.
- Any revision to the zero-MDR policy or extension of government incentive/subsidy programs for UPI and RuPay.
- Published details on whether the ₹2,000 threshold applies per transaction, per merchant category, or only to P2M QR payments.
- Merchant association responses, especially from e-commerce, electronics, travel, healthcare, education and premium retail.
- Changes in high-value UPI transaction growth, average transaction value, transaction-splitting behavior and card acceptance volumes.
- Statements from major banks on whether MDR proceeds would be shared with issuers, acquirers and PSPs.
- PhonePe, Google Pay, Paytm and banks intensify lobbying around payment-network sustainability and publish cost-of-processing data.
- Large merchants, aggregators and retail associations seek exemptions, rate caps, or pass-through permissions before any MDR notification.
- PSPs prioritize monetizing merchants through credit, soundboxes, reconciliation, loyalty, fraud tools and checkout products regardless of MDR outcome.
- Merchants with average ticket sizes above ₹2,000 begin evaluating card-versus-UPI acceptance economics and potential surcharge or discount policies.
- NPCI and regulators may define transaction thresholds, merchant categories, settlement treatment and safeguards against splitting payments to avoid fees.