India proposes UPI MDR return, putting merchant payment costs back in play
A proposed amendment to India’s payments law could restore merchant discount rates on UPI and RuPay debit payments after six years of zero MDR. Any rate would be set in a future government notification, potentially raising acceptance costs for retailers while improving bank and payment-app monetisation.
India may amend the Payment and Settlement Systems Act to restore merchant charges on UPI. The proposed MDR would raise acceptance costs for merchants while benefiting banks most directly and potentially improving monetisation prospects for PhonePe, Google Pay and other payment providers.
Why this matters
The proposal follows recent signals that India is weighing MDR of up to 0.35% on high-value UPI payments and may allow MDR on electronic payments outside a negative list.
Retail-company signals are accelerating, up 204100% QoQ.