0.4 pc MDI Regime

When a government takes any decision, especially which have financial implications impacting a vast population, it is presumed that such a decision must have been taken after wider consultations, analysis of fund requirement, its utilization and beneficiaries. However, our analysis shows that finance ministry’s decision of levying Merchant Discount Rate (MDR) of 0.4 per cent on Unified Payments Interface (UPI) P2M transactions above Rs 2,000 effective from October 15, 2026 lacks prudence.

MDR Kitty & Distribution

As per NPCI website, about Rs 30 lakh Cr worth of UPI transactions took place in August 2026, out of which 70 per cent was P2P on which MDR is not applicable, and 30 per cent was P2M. And within this 30 per cent, 67 per cent was above Rs 2,000, on which MDR is applicable. A simple calculation would show about Rs 2,399 Cr MDR charges.