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The risk of consumers bearing the cost of UPI Merchant Discount Rate (MDR) charges is limited to around 10 per cent of the overall value on which MDR is collected, NPCI Managing Director and CEO Dilip Asbe said, adding that a majority of merchants are unlikely to pass the charges on to customers.
Speaking at the 13th SBI Banking & Economics Conclave 2026, Asbe said around 75 per cent of the overall UPI transaction value is outside the charging framework and therefore has no impact from the MDR policy. He said that of the approximately Rs 30 lakh crore in UPI transaction value, merchant payments account for around Rs 6-7 lakh crore, with the charging framework primarily covering transactions above Rs 2,000. 75 per cent of this merchant on the QR code has not received the transaction below about Rs 2,000... So, 75 per cent has not even seen a single transaction about Rs 2,000. So there is absolutely no impact of our policy back to them, Asbe said. Explaining the potential impact on consumers, Asbe said around 80 per cent of the MDR collected comes from businesses with annual GMV and digital payment collections of more than Rs 1,000 crore. These large businesses, he said, already accept credit cards and pay significantly higher charges. As a result, NPCI believes they are less likely to pass the UPI-related charges on to consumers. Asbe further said that of the remaining 20 per cent of MDR collections, businesses with annual turnover of Rs 1 crore and above could account for another 10 per cent. These businesses also accept credit cards and may not necessarily pass the charges on to customers. However, he acknowledged that there could be a possibility of consumers being charged in the remaining 10 per cent of MDR collections. The banks and NPCI, the acquirers, the payment aggregators will have to work towards ensuring that the charges are not passed back... The real risk of charging consumer getting charged is 10 per cent of the overall value, Asbe said. On UPI growth, Asbe said transaction value is currently expected to grow by around 10 per cent this year, while transaction volumes could increase by 15-17 per cent. He attributed the moderation in growth primarily to lower investments by ecosystem participants after the initial five to six years of heavy investment in UPI infrastructure. Asbe said the absence of a revenue model had led ecosystem participants to scale back investments, while factors such as education, awareness and trust could also affect growth. He said the long-term objective was to expand UPI usage among a billion users and build an infrastructure that could support greater access to credit, investments and insurance. (ANI)
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