Fintech leaders have expressed support for the upcoming 0.4% UPI merchant fee on transactions above ₹2,000. While the change marks a shift from the long-standing zero-fee model, it aims to create a sustainable revenue stream for the ecosystem. Investors will watch if this transition impacts UPI's rapid adoption rate.
Leading fintech companies, including major players like Groww, BharatPe, MobiKwik, and Fam, have expressed support for the upcoming Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions. Following a virtual meeting with National Payments Corporation of India (NPCI) CEO Dilip Asbe, industry leaders acknowledged that while the transition involves operational adjustments, the new fee structure could establish a more sustainable revenue model for digital payment providers.
Starting October 15, 2026, a merchant discount rate of up to 0.4% will be applied to UPI transactions exceeding ₹2,000. This development signals a significant shift in India’s digital payments landscape, moving away from the zero-fee regime that has been in place since 2020. The introduction of these fees is intended to provide banks and payment applications with a recurring revenue stream, which may support further investments in digital infrastructure.
The framework also addresses the specific needs of the capital markets sector, where merchant transactions related to stock trading often involve higher values. In this segment, the MDR has been capped at a lower rate of 0.02%, following discussions between stock broker associations and the Securities and Exchange Board of India (SEBI).
For investors, the October 15 rollout is a significant monitorable. The primary focus will be on whether the payment ecosystem can implement the fee changes smoothly without disrupting the current pace of UPI adoption. While the move offers potential financial benefits for payment service providers, the long-term impact on transaction volumes and merchant retention remains the key variable. As the sector transitions to a fee-based model, market participants will likely look for updates on transaction trends and operational efficiency in the months following the implementation.