Influencers see UPI MDR introduction in India as vital step for ecosystem monetisation: GlobalData

The introduction of a 0.4% Merchant Discount Rate (MDR) on Person-to-Merchant (P2M) Unified Payments Interface (UPI) transactions above INR 2,000 ($20.8) in India has sparked substantial debate among influencers on X.
Influencers see the measure as an attempt to create a durable revenue base for banks, acquirers, and payment platforms, but they also expect merchants to test ways of limiting their exposure to these charges, reports GlobalData, publishers of EPI.

Shreyasee Majumder, Social Media Analyst at GlobalData, said: "Influencers largely view MDR as a transition to a model in which participants in the UPI ecosystem can earn revenue from merchant transactions. They expect the additional income to support payment infrastructure, cybersecurity investment, and the development of services beyond basic payments, including credit-linked products.

"Clearer UPI monetisation is also seen as improving the financial outlook for payment companies, supporting public listing plans for major players such as PhonePe, and significantly lifting forward earnings forecasts for merchant platforms like Paytm and Pine Labs.

"Influencers expect larger merchants above monthly turnover thresholds to absorb the fee, while peer-to-peer transfers, recurring payments, and rural QR codes remain exempt. They anticipate that some merchants may encourage cash payments or use other means to recover the expense on higher-value transactions. However, influencers also emphasised that the new UPI levy remains substantially lower than traditional debit and credit card processing charges. In the long term, the ecosystem must ensure that improvements in infrastructure and value-added services outweigh merchant cost pressures to preserve widespread digital adoption."

• Bipin Preet Singh, CEO at MobiKwik:

"UPI is run as an ecosystem by banks and fintechs and NPCI. It is not funded or run by the Govt. When Govt funds the subsidies paid for UPI ,that amount comes from tax payers pocket. Moving to market linked pricing mechanism removes this tax burden and directly links the cost to large businesses which benefit from UPI. Think logically: If there was no UPI, customers will have to keep cash and businesses have to handle and store cash. That's not free."

• Chandra R. Srikanth, Executive Editor at Moneycontrol:

"The cost cannot be passed on from the merchant to the customer, in principle. But if the merchant gets more than 1 lakh per month from UPI, MDR will apply. It might lead to merchants asking/incentivising customers to pay in cash. That said, UPI MDR is still lesser than charges on debit card (0.90%) and credit cards (1.5-2.5 %)"