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Panel flags Rs 20,700 crore UPI cost gap, backs tiered MDR for high-value merchant payments
Our read
India is more likely to preserve free everyday UPI while creating a modest, capped fee path for high-value or large-merchant transactions than to impose broad-based MDR.
For operators
Model threshold-based MDR exposure now, especially for high-value UPI tickets, and prepare pricing, payment-routing and vendor-negotiation contingencies while consumer transactions remain free.
Watch
Finance Ministry, RBI, NPCI or MeitY consultation paper proposing MDR thresholds, merchant categories, transaction-value bands or interchange rules.
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The report,
Parliamentary panel urged a sustainable tiered UPI revenue model, citing a Rs 20,700 crore cost against Rs 2,000 crore government support. Amendments enable limited, threshold-based MDR on high-value merchant transactions, while consumer UPI payments will remain free.
Reported figures
From the report. Source details below
- 11% of actual industry costs covered
- 14% of potential MDR collections covered
- Up to 150 billion transactions per month
- 600 million new users expected
Why it matters to operators
Prioritize partnerships or capabilities in payment orchestration, merchant acquiring and value-added UPI services that can help enterprises manage a potentially paid high-value transaction tier.
The counter-case
The case against this reading — not reported by the source.
This is only a committee recommendation, not an approved regulatory change. The government has repeatedly defended zero-MDR UPI as a public-good policy, and any merchant charge could face political resistance, especially from small businesses and consumer groups. Even if a tiered MDR is introduced, large merchants may absorb, negotiate down, or redirect transactions rather than materially raising retail prices or payment-sector revenues.
The source
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First seen