India, Sept. 16 -- India's UPI ecosystem is moving from a zero-MDR structure towards selective monetisation of larger merchant payments. From October 15, person-to-merchant, or P2M, transactions above Rs.2,000 will attract a 0.4% Merchant Discount Rate, while person-to-person transfers will remain free and roughly 96% of P2M transactions will continue to face no charge.

For listed banks and payment companies, MDR creates a direct revenue pool around payment volumes that were earlier processed without transaction-linked income. The important question is how this fee is divided between issuing banks, acquiring banks, payment service providers and UPI applications.

What Changes Under the New UPI MDR Framework? A 0.4% MDR will apply to el...