PhonePe founder and chief executive Sameer Nigam on Wednesday said about 96% of Unified Payments Interface transactions will remain free after the introduction of a Merchant Discount Rate on large-value merchant payments.
Nigam said, "Around 96% of transactions will remain free because the majority of UPI transactions in India are below Rs 2,000. The NPCI has authorised a 0.4% MDR on UPI transactions exceeding Rs 2,000. As a result, the charge will apply only to larger transactions, and the revenue generated will help the industry at least recover its operational costs. For the past six years, while UPI transactions were MDR-free, the entire payments industry has been absorbing substantial losses every year."
Nigam said India had been the only country among more than 200 markets with digital payment systems where such transactions carried no MDR. The additional revenue should allow payment companies to invest in expanding UPI and support the ecosystem's sustainability, he said.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
Nigam said, "We have consistently raised this issue with the government and the RBI. Digital payment systems operate in more than 200 countries worldwide, yet India was the only country where UPI transactions carried no MDR. Now that a limited MDR has been introduced, we hope it will contribute to the further growth of the UPI ecosystem. This additional revenue will enable the industry to invest more in expanding UPI. This move is important for the long-term growth and sustainability of the UPI ecosystem."
#WATCH | On UPI payments to remain free for person-to-person transactions and Merchant Discount Rate (MDR) applicable only on Large-Value Merchant Transactions, Founder & CEO of PhonePe, Sameer Nigam, says, "...Around 96% of transactions will remain free because the majority of… pic.twitter.com/M1SFGPhHMV
— ANI (@ANI) September 16, 2026
Nigam described the new rate as among the lowest globally. He added that accepting digital payments offers merchants convenience, creates a transaction history and establishes a digital footprint that could help them access formal credit and business loans.
MDR Charges On UPI
The government on Tuesday introduced a 0.4% MDR on person-to-merchant UPI transactions exceeding Rs 2,000, ending six years of free payments on the platform. The levy will take effect from Oct. 15 and will be capped at Rs 300 for transactions of Rs 75,000 and above.
Person-to-person transfers and merchant payments of up to Rs 2,000 will remain free. Customers will not bear the charge, the finance ministry said, clarifying that MDR operates within the merchant payment ecosystem. Individuals will continue to receive unlimited free UPI usage without monthly quotas, volume restrictions or tiered caps.
ALSO READ: UPI MDR From October 15: Who Pays, What Changes, Which Payments Stay Free? Five Things To Know
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
