NPCI Introduces 0.4% MDR on Merchant UPI Payments Over ₹2,000

Gist The National Payments Corporation of India NPCI has introduced a 0.4% Merchant Discount Rate MDR on UPI transactions exceeding ₹2,000 , effective October 15 . This marks a pivotal shift from the complete zero-MDR regime, aiming to make the UPI ecosystem self-sustaining by generating revenue for banks and payment providers. For aspirants, this highlights the evolving economics of India's Digital Public Infrastructure, balancing free access for ordinary users with commercial viability for service providers. Background The Merchant Discount Rate MDR is the fee a merchant pays to a bank or payment service provider for processing a digital transaction. Previously, the Union Government mandated a zero-MDR regime for UPI and RuPay debit cards to drive rapid digital adoption, stepping in to compensate banks through budgetary subsidies. The National Payments Corporation of India NPCI , the umbrella organization for operating retail payments and settlement systems in India, regulates the UPI network. By selectively lifting the MDR waiver, the new framework transitions UPI from a purely subsidized public good to a partially commercial model, creating a direct revenue stream for the entities…