RBI flags UPI funding needs, but says merchant fee debate is premature
RBI Governor Sanjay Malhotra said digital-payments infrastructure costs must be funded, while cautioning that it is too early to predict a return of merchant discount rates on UPI. Any future MDR, particularly on high-value transactions, could reshape payment-acceptance costs for retailers.
What happened
Reserve Bank of India · RBI Governor Sanjay Malhotra said it is premature to predict a return of merchant discount rates on UPI, while stressing
Key facts
- 12 states have digitised land records
Why this matters
Model potential MDR scenarios into payments partnerships and checkout economics, but avoid treating a UPI fee return as a near-term certainty.
What to watch
- RBI consultation paper, payment-system policy statement or formal reference to UPI merchant pricing, interchange or cost recovery.
- Union budget or ministry announcements on continuation, expansion or redesign of UPI incentive subsidies.
- NPCI circulars introducing transaction-value bands, merchant-category rules, PSP fees or revised incentive structures.
- Acquirer and payment-gateway pricing changes for enterprise merchants, especially fees labeled as platform, settlement, reconciliation or risk-management charges.
- Evidence of UPI ticket-size growth in electronics, travel, luxury, wholesale and marketplace categories, strengthening the case for high-value pricing.
- Large merchants increasing card/EMI promotions or adding payment-method-specific checkout incentives.
- Model payment-acceptance P&L exposure by UPI ticket size, merchant category and store format; isolate high-value transactions most likely to face future fees.
- Build checkout-routing capability across UPI, cards, net banking, wallets and pay-later products so tender mix can be managed if costs diverge.
- Review customer incentives for high-ticket categories: preserve UPI convenience while preparing card, EMI or account-to-account alternatives that do not create regulatory surcharge risk.
- Ask acquirers, PSPs and banks for contractual clarity on pass-through clauses, pricing-change notice periods, settlement charges and value-added service fees.
- Prioritize fraud, reconciliation and payment-success improvements now; even without MDR, providers may monetize infrastructure through software and service charges.