Overview
- IIT Bombay researchers published findings on Monday, October 12, 2026 that quantify effects of the proposed Merchant Discount Rate.
- The government/NPCI proposal would apply a 0.4% MDR on merchant UPI payments above Rs 2,000 with a Rs 300 cap and keep person‑to‑person and low‑value merchant transfers free.
- Using August 2026 data the report estimates roughly Rs 6 lakh crore of monthly merchant UPI volume would be subject to the charge and projects about Rs 1,500 crore per month or Rs 18,000 crore a year in provider revenue.
- The paper warns merchants commonly keep one price across payment types and may raise retail prices to recoup MDR, and it recommends targeted exemptions, tighter caps, limiting charges to large or online merchants and redirecting revenue to UPI infrastructure.
- NPCI and the government have said consumers will not be billed directly and UPI apps cannot levy platform fees, and media reports say NPCI is considering delaying rollout to January 1, 2027 to give banks, apps and merchants time to prepare.