UPI takes 77.3% of merchant payments as cards lose share
UPI’s share of India’s person-to-merchant digital payments rose to 77.3% in July, while credit-card share fell to 17.7% and debit-card share to 3.2%. Proposed MDR on higher-value UPI transactions could alter merchant payment-acceptance costs.
What happened
UPI expanded its share of India’s merchant payments to 77.3% in July as credit and debit cards lost ground. Proposed targeted MDR charges on higher-value UPI
Key facts
- UPI: 77.3% of person-to-merchant transactions in July, versus 74.9% a year earlier
- India digital merchant payments: ₹11.7 lakh crore in July, up 19.6% year-on-year
- Credit cards: 17.7% share in July, versus 19.8% a year earlier
- Debit cards: 3.2% share in July, versus 3.9% a year earlier
- UPI retail-payment transaction-volume share: 86.8% in June-quarter FY27 versus 73.6% in FY23
- 67.2% of UPI merchant transaction value is above ₹2,000
- Potential MDR revenue: ₹15,000-30,000 crore at a 0.25%-0.50% rate
Why this matters
Evaluate partnerships or acquisitions in UPI payment orchestration, merchant SaaS and reconciliation, with MDR regulation as a key diligence variable for monetization upside.
What to watch
- Final RBI, NPCI, or government guidance on MDR for higher-value UPI merchant transactions, including thresholds, exemptions, and effective dates.
- UPI share changes in high-ticket categories such as electronics, jewellery, travel, healthcare, and durable goods.
- Growth in UPI credit lines, RuPay credit card on UPI, and UPI autopay, which could blur the distinction between UPI volume and credit-funded spending.
- Merchant discount-rate changes, QR acceptance fees, and payment-aggregator pricing for enterprise retailers.
- Card issuer reward devaluations, EMI subsidy intensity, and co-branded card acquisition campaigns.
- UPI outage rates, fraud-loss trends, and consumer trust events that could create openings for card rails.
- Make UPI the default checkout journey across store, app, web, and social-commerce channels, with card and cash retained as frictionless fallbacks.
- Audit payment-cost exposure by ticket size, category, and merchant entity to model potential MDR thresholds and pass-through options.
- Invest in UPI-linked loyalty, instant coupons, and repeat-purchase flows rather than relying solely on card-funded promotions.
- Upgrade reconciliation and fraud controls for high-volume UPI collections, refunds, split payments, and payment-link transactions.
- Use card partnerships selectively for EMI, premium rewards, and high-ticket conversion instead of broad card-discount programs.