‘The additional revenue will help’: MobiKwik, PhonePe founders back MDR charge on UPI transactions over ₹2000

MDR on UPI transactions: The Merchant Discount Rate (MDR) on large-value UPI transactions exceeding ₹2,000 has ignited a debate. While some have questioned the need to impose the MDR of 0.4% on merchant transactions over ₹2,000, some have said this move was long called for.

MobiKwik co-founder Upasana Taku called it a very positive step for India, while  Founder & CEO of PhonePe, Sameer Nigam, called it important too.

Taku said because of UPI digital payments have scaled massively in India but the cost of maintaining the infrastructure has also increased. She told ANI that companies have struggled to support these costs.

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“So, this new direction is very positive for the payments industry, banks, and payment companies. For the common Indian customer, there is effectively no change. Person-to-person transactions, such as payments to family and friends, remain free. Small-value everyday transactions – buying bread, vegetables, and other items worth ₹200, ₹500 or ₹1,000 – also remain free,” she elaborated, adding that transactions like booking a flight ticket, shopping on Amazon, or buying expensive items at a mall would invite the MDR charge.

“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,” she said.

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Nigam also reiterated Taku. He said that “the revenue generated will help the industry at least recover its operational costs”. Nigam added that when UPI transactions were MDR-free, the entire payments industry was absorbing substantial losses every year.

“We have consistently raised this issue with the government and the RBI. Digital payment systems operate in more than 200 countries worldwide, yet India was the only country where UPI transactions carried no MDR. Now that a limited MDR has been introduced, we hope it will contribute to the further growth of the UPI ecosystem. This additional revenue will enable the industry to invest more in expanding UPI. This move is important for the long-term growth and sustainability of the UPI ecosystem," said Nigam to ANI.

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UPI is operated by the National Payments Corporation of India (NPCI), an initiative of the Reserve Bank of India and the Indian Banks' Association. Its presence has expanded overseas to 11 countries, with Uzbekistan being the latest addition. Other countries where UPI is accepted include Singapore, the United Arab Emirates, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia, and Greece.

UPI transaction value has grown from ₹0.07 lakh crore in the financial year 2017 to around ₹314 lakh crore in the financial year 2026, marking more than a 4,000-fold increase over the decade.