Business · India Bureau
UPI MDR Restoration Could Generate ₹15,000-20,600 Crore Annually
Brokerages project significant revenue gains for banks and fintech companies if merchant discount rates are reintroduced on UPI payments. The move could reshape India's digital payments economics.
LSN India ·
Financial analysts estimate that restoring merchant discount rates (MDR) on UPI transactions could unlock ₹15,000-20,600 crore in annual revenue for India's banking sector and listed fintech companies, according to brokerage assessments.
MDR, a fee charged to merchants for payment processing, was eliminated on UPI when the National Payments Corporation of India (NPCI) launched the platform to drive digital adoption. The removal of this revenue stream has been a point of contention among banks and payment service providers seeking sustainable business models in the digital payments space.
Brokerages conducting financial analysis suggest that reintroducing MDR on merchant payments could significantly improve profitability metrics for entities operating within the UPI ecosystem. The projected revenue range reflects varying assumptions about implementation timelines and merchant adoption rates across different business categories.
The potential reinstatement of MDR remains a policy matter under consideration by regulators and stakeholders. Any changes to UPI's fee structure would likely require deliberation among NPCI, the Reserve Bank of India, and industry participants balancing merchant accessibility with service provider sustainability.