India set to introduce 40bps MDR on larger UPI merchants
UPI payments are getting a shake-up: India is set to introduce a 40-basis-point merchant fee (MDR) for bigger businesses, partly unwinding six years of zero charges for larger merchants.
This new fee may apply to merchants with over ₹1-1.5 crore turnover and on transactions above ₹2,000.
Banks are expected to get the biggest slice of this revenue, and an official announcement is coming soon.
Issuing banks 40% apps acquirers 30%
The MDR will be shared between banks and payment apps like PhonePe or Google Pay: issuing banks get 40%, while payment apps and acquiring banks each take 30%.
Jefferies estimates high-value UPI payments could generate ₹5,000-10,000 crore in annual MDR revenue for these players.
Regular users and small shops won't be affected, so if you're just sending money or buying chai, you're in the clear!