India plans 0.4% UPI MDR on merchant payments above Rs 2,000, targeting Rs 15,000 crore in annual revenue
AI Market Summary
India plans to reintroduce a 0.4% MDR on UPI merchant payments above Rs 2,000, targeting large-value flows that are only 4% of volume but 67% of value. The levy could raise ~Rs 15,000 crore annually and modestly improve payment economics for banks and ecosystem participants, while raising friction for merchants and risking partial reversion to cash acceptance.
Impact level
● Low
Affected assets
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India’s government is proposing a 0.4% merchant discount rate (MDR) on UPI merchant payments above Rs 2,000, which could generate Rs 15,000 crore a year. That revenue would be less than 4% of the net profits of all listed commercial banks in India in FY26. It would also amount to 7% of the combined net profits of State Bank of India, HDFC Bank and ICICI Bank. Payments above Rs 2,000 make up 4% of UPI merchant transactions by volume but account for 67% of the total value.
