RBI Confident UPI Payments Remain Strong Despite New MDR Fee

The Reserve Bank of India’s Governor, Sanjay Malhotra, told reporters on October 7 that the recently announced 0.4% merchant discount rate for UPI transactions over INR 2,000 will not weaken the platform’s momentum.

“Currently, we do not see any slowdown in transaction numbers, and a small fee is unlikely to cause a significant shift in user behavior,” Malhotra said during a press interaction at the RBI’s main office.

The National Payments Corporation of India (NPCI) will implement the fee from October 15. Earlier statements from NPCI’s chief executive indicated that the policy would affect only a small segment of merchants, as roughly three‑quarters of the six million UPI merchants have never processed a payment above the INR 2,000 mark.

With such a limited exposure, the RBI expects the new MDR to have a marginal effect on the overall payment ecosystem. The Governor also dismissed speculation about imminent interest‑rate adjustments, emphasizing that credit growth remains healthy and that the central bank is vigilant about liquidity in non‑bank lenders without foreseeing any deterioration in asset quality.