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UPI firms pivot to merchant services as BharatPe expects ~95% of transactions to escape MDR
UPI merchant discount rate applies only to person-to-merchant transactions above ₹2,000, and BharatPe's COO says around 95% of transactions will not attract it. Payment firms are therefore pivoting to merchant lending, soundboxes, reconciliation and other services for revenue.
Why it matters to operators and investors
For most everyday baskets, especially in smaller towns where average tickets sit below ₹2,000, UPI should stay free of MDR, but retailers selling higher-ticket items such as electronics, appliances or jewelry should model the cost on payments above ₹2,000 and treat incoming soundbox, lending and reconciliation offers as optional add-ons to judge on merit.
What to watch next
- Any official notice changing the ₹2,000 MDR threshold or its scope
- Quarterly disclosures showing merchant lending or soundbox revenue growing faster than payment revenue
- New lender or NBFC partnership announcements with UPI firms
- Reported share of UPI volume above ₹2,000 per transaction moving away from the ~5% BharatPe implies
- Rising defaults or write-offs in merchant loan books
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