Budget 2025 slashes digital payments incentives: Is MDR on its way out?

With the Budgetary outlay for UPI transactions cut by 78 per cent, industry insiders wonder if transaction fees are likely to be introduced

Lack of revenue from processing Unified Payments Interface (UPI) payments and now a reduction of subsidy for the promotion of such transactions has the industry wondering: Will the reduced incentives be enough and is there a fee structure for UPI on the cards? 

The Union Budget 2025 was largely silent on digital payment subsidies that trickle down to banks and financial technology (fintech) firms. In fact, the government has even slashed the financial year 2026 (FY26) outlay for promoting peer-to-merchant (P2M) UPI transactions and RuPay debit card payments. 

The Centre has allocated only Rs 437 crore in the budget for