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UPI’s New MDR Charge Welcomed by Industry Leaders

The Reserve Bank of India’s decision to levy a 0.4% Merchant Discount Rate on UPI merchant transactions above ₹2,000 has been met with enthusiasm from key players in the payments sector. Sameer Nigam, founder and CEO of PhonePe, said the new fee will help the industry recover operational costs and reinvest in UPI’s growth. MobiKwik co‑founder Upasana Taku called the move a “very positive step” that will make the payments ecosystem more sustainable amid rising infrastructure expenses. The charge applies only to large merchants, such as those booking flights or shopping on Amazon, and will not affect person‑to‑person transfers or small merchants with monthly sales near ₹1 lakh. Nigam highlighted that India was the only country where UPI had operated without an MDR, noting the new fee aligns India with global payment norms. He added that the additional revenue will enable banks and payment companies to maintain the underlying infrastructure that supports over 70–80 crore daily UPI transactions. Industry analysts say the fee could encourage better cost management and reduce the financial burden on banks that have struggled to support the platform’s rapid expansion. The RBI plans to roll out the MDR from October 15, with the aim of ensuring the long‑term viability of the UPI ecosystem while keeping consumer costs unchanged.

· Hindustan Times

The essential points

  1. 01RBI introduces 0.4% MDR on UPI merchant transactions above ₹2,000, starting Oct 15.
  2. 02PhonePe CEO Sameer Nigam says fee will help recover operational costs and fund UPI’s future growth.
  3. 03MobiKwik co‑founder Upasana Taku calls it a “very positive step” for sustainability amid rising infrastructure expenses.
  4. 04Only large merchants, like flight bookings and Amazon purchases, will pay the fee; small merchants and P2P transfers remain exempt.
The full brief

The Reserve Bank of India’s decision to levy a 0. 4% Merchant Discount Rate on UPI merchant transactions above ₹2,000 has been met with enthusiasm from key players in the payments sector. Sameer Nigam, founder and CEO of PhonePe, said the new fee will help the industry recover operational costs and reinvest in UPI’s growth.

MobiKwik co‑founder Upasana Taku called the move a “very positive step” that will make the payments ecosystem more sustainable amid rising infrastructure expenses. The charge applies only to large merchants, such as those booking flights or shopping on Amazon, and will not affect person‑to‑person transfers or small merchants with monthly sales near ₹1 lakh. Nigam highlighted that India was the only country where UPI had operated without an MDR, noting the new fee aligns India with global payment norms.

He added that the additional revenue will enable banks and payment companies to maintain the underlying infrastructure that supports over 70–80 crore daily UPI transactions. Industry analysts say the fee could encourage better cost management and reduce the financial burden on banks that have struggled to support the platform’s rapid expansion. The RBI plans to roll out the MDR from October 15, with the aim of ensuring the long‑term viability of the UPI ecosystem while keeping consumer costs unchanged.