RBI backs MDR on large-value UPI transactions, says could help expand UPI acceptance
The Reserve Bank of India (RBI) has publicly supported the implementation of Merchant Discount Rate (MDR) on large-value UPI transactions. This move is intended to ensure the long-term financial sustainability and growth of India's digital payments ecosystem. The new provisions will apply MDR to person-to-merchant transactions exceeding ₹2,000, with smaller merchant payments and all person-to-person transfers remaining free of charge. The central bank views this as crucial for the continued expansion and robustness of UPI infrastructure.
What this means
This official endorsement from the RBI signifies a strategic shift towards monetizing the UPI ecosystem to fund its operational and technological advancements, moving away from a completely free model for certain transaction types. It aims to balance user convenience with the financial health of payment service providers and banks.
Most affected: Digital payment platforms & Merchant Acquirers
Key takeaway: Banks and fintechs should prepare for changes in revenue streams and merchant acquisition strategies post-October 15, with a focus on value-added services for larger transactions.
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