Large Enterprises Expected to Bear Bulk of UPI MDR Burden, NPCI Explains

In a speech at the SB&I Banking and Economic Conclave, NPCI’s Dilip Asbe detailed how the new Merchant Discount Rate for UPI will be distributed across the merchant ecosystem.

India’s digital payment landscape includes more than 6 crore distinct UPI merchants, but a striking 75 % of them have never executed a transaction greater than ₹2,000.

Consequently, the revised MDR, which is triggered only for higher‑value payments, will have little to no effect on this large cohort.

The policy’s financial impact is skewed toward high‑value businesses. Approximately 80 % of the MDR revenue is anticipated from merchants whose annual GMV exceeds ₹1,000 crore, while about half of the remaining revenue will come from those with GMV over ₹1 crore.

Since these major players already process credit‑card payments and absorb similar fees, they are unlikely to pass the MDR onto end‑customers.

A small fraction—around 10 % of the merchant base—might see an incentive to shift the cost, but NPCI, together with acquiring banks and aggregators, will enforce safeguards to keep such charges away from consumers.

Asbe concluded that the new rate structure should not cause any noticeable change in UPI transaction frequency or total value.