Government plans to end small value UPI subsidies, reinstate MDR
Business
The government is looking to stop subsidies for small-value UPI payments, according to The Economic Times.
Instead, they plan to bring back merchant discount rates (MDR) on bigger transactions, so banks and payment apps can actually earn from the services they provide.
UPI subsidies halted since April 2025
No new UPI subsidies have been given out since April 2025, even though there's still a big budget set aside.
A senior banking official shared that the goal is to cut down on taxpayer-funded support, especially for large merchants.
The move also shifts focus toward building a more sustainable way for digital payments to grow, helping the ecosystem stand on its own without constant government help.