UPI’s limited MDR plan could reshape merchant payment economics
NPCI’s proposed 0.4% MDR on select UPI merchant transactions above ₹2,000 would create a new revenue pool for banks and payment service providers. The retail impact hinges on the revenue-sharing formula and whether smaller merchants continue absorbing UPI acceptance costs.
What happened
NPCI’s limited UPI MDR framework creates a new revenue pool for banks, PSPs and app providers. Its retail impact will depend on fee-sharing, merchant absorption
Key facts
- 0.4% MDR on select UPI P2M transactions above ₹2,000
- ₹300 cap for transactions of ₹75,000 and above
- 24.51 billion UPI transactions in August
- ₹29.82 lakh crore UPI transaction value in August
- More than 24 billion UPI transactions processed monthly
Why this matters
Payments players should assess partnerships or acquisitions that strengthen merchant acquiring, routing, and value-added services as UPI’s zero-cost acceptance model potentially shifts toward tiered economics.