India Must Retain Zero MDR For Small Merchants To Protect UPI’s Inclusion Gains: Industry Experts

New Delhi, August 20, 2026 — India must maintain a zero Merchant Discount Rate (MDR) on UPI transactions for small merchants and low-value payments, according to industry experts. The Policy Watch India Foundation's report highlighted that affordability has been crucial for UPI's rapid adoption and subsequent financial inclusion, warning that a user fee could adversely impact poor and informal economy participants.

Dharmender Jhamb, Partner at Grant Thornton Bharat, emphasized that zero MDR has been central to democratizing digital payments in India, lowering barriers to adoption and strengthening UPI's global reputation as a digital public infrastructure. Balancing sustainability and affordability in the evolving payments framework, as mandated by the recent amendment to the Payment and Settlement Systems Act, is essential, experts stressed.

UPI's emergence as a key component of India's digital public infrastructure and its role in supporting small businesses and low-income families, particularly in the informal economy, underscores the importance of keeping the zero MDR policy intact.