Potential UPI MDR regime could unlock Rs 22,000 crore annual revenue pool by FY28: Bernstein

Bernstein estimates a 40-basis-point MDR on eligible UPI payments could create a Rs 22,000 crore annual revenue pool by FY28E, with banks taking about Rs 14,000 crore and TPAPs about Rs 7,000 crore. UPI transactions up to Rs 2,000 currently remain protected from direct or indirect charges.

— Source publishedTue, 15 Sept, 2026, 08:39 IST·First seen Tue, 15 Sept, 2026, 10:10 IST·Source NDTV Profit

What happened

Bernstein estimates a potential 40-basis-point UPI MDR regime could create a Rs 22,000 crore annual payments revenue pool by FY28E. The government currently

Key facts

  • Rs 22,000 crore potential revenue pool by FY28E
  • 40 basis-point MDR
  • 50% of UPI transaction value assumed eligible
  • Rs 14,000 crore potential bank revenue
  • Rs 7,000 crore potential TPAP revenue
  • UPI transactions up to Rs 2,000 protected from charges
  • Issuing banks: 30% economics
  • Acquiring banks: 25%
  • PSP banks: 5% each
  • Merchant-side TPAPs: 23%
  • Consumer-side TPAPs: 8%
  • Payment network: 5%

Why this matters

Payments platforms, banks and merchant-acquirer partners may reassess alliances and monetization strategies around UPI, as a move away from zero MDR could materially alter value sharing despite no framework yet being announced.

What to watch

  • Finance Ministry, RBI or NPCI consultation language on UPI pricing, subsidy design, merchant discount rates or payment-system sustainability.
  • Any distinction between P2P, P2M, low-ticket, high-ticket, online, offline, credit-on-UPI and commercial payments.
  • Changes to the Rs 2,000 protected transaction threshold or explicit rules on indirect merchant charges.
  • Government budget allocations or reimbursement mechanisms for UPI payment-service costs.
  • NPCI data showing UPI growth, merchant acceptance expansion, transaction ticket-size trends and concentration among TPAPs.
  • Statements from major banks, PhonePe, Google Pay, Paytm and payment aggregators on monetization, merchant fees or acquiring economics.
  • Large retailers should model UPI acceptance costs by ticket size, category and payment mix, including whether a surcharge or price adjustment is legally and competitively feasible.
  • Payment aggregators and TPAPs are likely to prioritize enterprise merchant contracts, value-added services, credit, loyalty and checkout conversion tools that can defend economics even without MDR.
  • Banks may intensify efforts to capture UPI transaction flows through proprietary apps, current accounts, merchant acquiring and UPI-linked credit products.
  • Merchants with high UPI share may steer customers toward lower-cost instruments or negotiate bundled acquiring contracts if MDR is proposed.
  • Retailers should prepare for higher scrutiny of payment surcharging and customer communication, since visible UPI fees could create checkout abandonment and reputational risk.