Return of MDR a key step towards making UPI sustainable and enabling further growth: Experts
Effective October 15, UPI payments to merchants (P2M) above Rs 2,000 will attract a 0.4% merchant discount rate with an overall cap of Rs 300. Besides, a flat concessional MDR rate of Rs 5 would be applicable on specific merchant categories such as railways, telecom services, insurance, and fuel for transaction above Rs 2,000.
Experts believe the reintroduction of Minimum Discernment Rate (MDR) on UPI transactions over Rs 2,000 is a crucial step towards creating a sustainable foundation for the ecosystem and stimulating further growth. The regulator has also set up a fund to promote UPI usage among small merchants with a 5% contribution from MDR collections.
PayU CEO Anirban Mukherjee highlighted that UPI's real strength lies in connecting millions of merchants and customers to the digital economy. The return of MDR will enable the system to scale up and ensure its long-term viability. Effective October 15, UPI payments to merchants above the threshold will attract a 0.4% merchant discount rate, with a cap of Rs 300.
Additionally, specific merchant categories will face a flat concessional MDR rate of Rs 5. This calibrated approach will help fund essential aspects like fraud prevention and acceptance infrastructure in smaller towns. The move will also encourage new entrants to innovate and increase UPI adoption. With the share of high-value UPI transactions rising, the decision reflects India's growing maturity in digital payment systems.
Cashfree co-founder Reeju Datta emphasized that a balanced MDR framework can foster sustainable economics for banks, payment providers, and last-mile networks, ensuring that digital payment adoption remains affordable and sustainable.
Written by urgent.news from Economic Times Tech's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
