UPI MDR positive for sustainable payments ecosystem: Upasana Taku

MobiKwik's Upasana Taku called the new MDR on large UPI transactions a 'very positive step' for the payments ecosystem's sustainability. She said it will help cover rising infrastructure costs without affecting common users or small merchants.

The introduction of Merchant Discount Rate (MDR) on large-value UPI transactions is a “very positive step” that will help make the payments ecosystem more sustainable as rising infrastructure costs have put pressure on banks and payment companies, MobiKwik Co-Founder Upasana Taku said.

In an exclusive interview with ANI, Taku said UPI has driven a massive expansion in digital payments across India. However, she noted, as the platform has grown, the cost of maintaining the underlying infrastructure has also increased, putting pressure on banks and payment companies.

"... It is a very positive step for India. UPI completed 10 years this year, and because of UPI, digital payments have scaled massively in India, with almost everyone using them. But as UPI has grown, the cost of maintaining the infrastructure has also increased, and banks and payment companies have struggled to support those costs. So, this new direction is very positive for the payments industry, banks, and payment companies.”

No Impact on Consumers and Small Merchants

She stressed that there would effectively be no change for the common Indian customer, as person-to-person transactions, including payments to family and friends, would remain free. Small-value everyday transactions of Rs 200, Rs 500 or Rs 1,000 would also remain free.

Taku said small merchants with monthly sales of around Rs 1 lakh would not face any charge, while the 0.4 per cent MDR would apply to large merchants handling high-value transactions, such as flight bookings, online shopping and purchases of expensive items at malls.

“For these large merchants, the UPI charge will be 0.4%, which is still much lower than the 1.6–1.8% typically charged for credit-card transactions,” she further added.

Supporting Sustainable Growth

According to Taku, revenue generated through the MDR would help make the continued growth of UPI and the broader payments industry more sustainable, while supporting banks and payment companies that maintain the underlying infrastructure.

“This revenue will help make the continued growth of UPI and the wider payments industry more sustainable, supporting banks and payment companies that maintain the infrastructure. "

NPCI's New Framework

The National Payments Corporation of India (NPCI) on Tuesday introduced a new Merchant Discount Rate (MDR) framework, under which UPI merchant transactions above Rs 2,000 will attract an MDR of 0.4 per cent, while consumers will continue to transact free of cost using UPI.

The revised UPI MDR framework will come into effect from October 15, 2026, and will apply to select merchant transactions.

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