India Payments: MDR on UPI – Déjà vu, but this time closer?

Research evidence excerpt

India Payments: MDR on UPI – Déjà vu, but this time closer?

17 June 2026

India Financials

India Payments: MDR on UPI — Déjà vu, but this time closer?

The debate around introducing a Merchant Discount Rate (MDR) on UPI has resurfaced— Pranav Gundlapalle

+91 226 842 1407 yet again. While periodic discussions in the past have largely faded without policy action, the

pranav.gundlapalle@bernsteinsg.com latest round appears slightly more credible, particularly given the absence of a strong rebuttal

from the government. We use this note as a reminder of the potential implications of MDR on

Ishan Mittal UPI for payment platforms, particularly Paytm.

+91 226 842 1442

ishan.mittal@bernsteinsg.com

What’s the development? The zero-MDR framework has been central to UPI’s success

Anirudh Gupta —driving scale, adoption, and ubiquity, while leaving the ecosystem with limited direct

+91 226 842 1456 monetization and prompting continued industry calls for the introduction of MDR on UPI

anirudh.gupta@bernsteinsg.com transactions.

The current episode was triggered by a recent Parliamentary committee report that put

forward the idea of a tiered MDR framework—acknowledging growth challenges in the

absence of clear monetization avenues and bringing the MDR issue back into active

consideration (link, Exhibit 1- Exhibit 3). Importantly, this time there has been no strong

push back from the government to news reports suggesting a potential MDR (unlike earlier,

when the Finance Minister had explicitly described UPI as a public utility that would remain

free – link). Instead, media interactions with a DFS advisor suggest a more “balanced

approach” (link), rather than a continuation of blanket zero MDR framework.

What could change? The broad contours of MDR, if introduced, are unlikely to be