UPI Person-to-merchant Transactions, Following a Provision in the Taxation and Other Laws Bill 2026 and a Statement by Reserve Bank of India

MDR is a fee banks and payment processors charge merchants for card transactions. Currently, P2M payments make up only 29% of total UPI value, per a Finance Ministry release. Filtering transactions above Rs.2,000 covers about 67% of P2M payments, which totaled Rs.5,80,568 crore in July alone.

With total UPI value at Rs.29.88 lakh crore in July, extrapolating for the year, a 0.25% MDR on P2M payments above Rs.2,000 would yield Rs.17,416 crore annually; 0.50% would yield Rs.34,833 crore, 0.75% Rs.52,249 crore, and 1% Rs.69,665 crore. The Centre currently provides incentives for UPI services, with Rs.2,000 crore budgeted for FY27 and Rs.2,196 crore revised for FY26. NPCI's FY25 financials show Rs.742 crore capital expenditure across systems like IMPS, Bharat Bill Pay, and Fastag, with a 36% net profit margin. An RBI 2022 discussion paper estimated the total cost per P2M transaction at 0.25% of value, but analysis suggests a lower MDR could adequately compensate stakeholders, especially as banks benefit from higher savings balances linked to UPI usage.