Payment aggregators demand direct cut from UPI transaction fees

Payment aggregators operating in India's digital payments ecosystem have intensified calls for a guaranteed and direct allocation of merchant discount rates (MDR) generated through Unified Payments Interface transactions.

The aggregators, which facilitate UPI payments for merchants and businesses, argue that a direct and fixed revenue share would provide greater financial certainty and support their business operations. However, industry observers expect their demand to encounter significant pushback from existing stakeholders in the UPI network.

The primary constraint facing aggregators is their structural position within the UPI system. Unlike banks and fintech companies that hold direct membership in the National Payments Corporation of India's UPI network, aggregators operate as intermediaries, connecting merchants to the payment infrastructure without formal membership status.

This indirect relationship has historically limited their ability to negotiate direct revenue participation in transaction fees. The NPCI, which governs UPI operations and MDR distribution, has traditionally channeled such revenues through direct network participants rather than intermediaries.

The outcome of this push remains uncertain, as any revision to UPI's MDR distribution framework would require consensus among multiple stakeholders and approval from regulatory bodies overseeing India's digital payments landscape.