New Delhi, Aug. 5 -- If the government eventually introduces a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions, the charges are likely to be borne by merchants while remaining free for consumers, with exemptions for small merchants and low-value transactions similar to the existing RuPay credit card-on-UPI framework noted a report by Global brokerage firm Bernstein.

In its report following an investor webinar on UPI monetisation, Bernstein said a merchant-funded MDR of 30-40 basis points (bps) appears to be the most likely outcome if the government decides to permit such charges.

"Based on debit card MDR benchmarks, RBI cost estimates, and comparable payment instruments, we believe an MDR of 30-40bps is the...