India, Sept. 18 -- Who Will Foot The UPI MDR Bill?

UPI transformed digital payments by making them virtually free. From October 15, this equation will change as high-value transactions will begin attracting MDR. While the new regime opens a new revenue pool for fintechs, it could reshape user behaviour. So, who will now bear the cost?

UPI Ends Free Ride: The new framework imposes a 0.4% MDR on P2M UPI payments above Rs.2,000, capped at Rs.300 for transactions of Rs.75,000 and more. Merchants receiving up to Rs.1 Lakh a month via QR codes remain exempt, but sellers crossing the threshold repeatedly will enter the MDR category. This could expose small businesses to payment acceptance costs, particularly during the festive season when high...