UPI has transformed India’s payments landscape, with transaction volumes growing at a CAGR of 188% between 2016-17 and 2025-26
The rapid expansion of UPI cannot rely indefinitely on government incentives. Banks and fintechs need a viable revenue model to sustain investment
Transactions up to ₹2,000 will remain free. This protects everyday retail payments and ensures the MDR does not undermine UPI’s broad-based adoption
Transactions above ₹2,000 account for only 4-5% of volumes but around 70% of value. A modest MDR can therefore recover costs without affecting most users
A profitable payments business can encourage banks and fintechs to invest in cybersecurity, innovation and better services while attracting more competition
Government support helped UPI scale rapidly but also contributed to market concentration. A reasonable MDR could support a healthier and more competitive ecosystem