Selective MDR on high value UPI payments may yield Rs 30,000 cr

India’s Unified Payments Interface ecosystem is entering a phase focused on long term sustainability, with proposed targeted Merchant Discount Rates on select higher value merchant transactions potentially generating Rs 15,000–30,000 crore in gross revenue opportunity, a report said on Tuesday.

The report from CareEdge Ratings projected the revenue based on a potential MDR-addressable pool of Rs 61.13 lakh crore in FY26 and a nominal MDR of 0.25 per cent to 0.50 per cent on select higher-value merchant transactions, while keeping consumers and P2P payments free.

“The key question is how this revenue is ultimately distributed across the ecosystem and whether merchants will be willing to absorb the associated cost,” said Tanvi Shah, Senior Director at CareEdge Advisory.

“With UPI processing nearly 2,400 crore transactions in a single month, the ecosystem has reached a scale where sustainability of the underlying payment infrastructure is becoming as important as transaction growth,” Shah said.

“With 741 banks live on UPI and monthly volumes exceeding 22 billion transactions, amounting to around Rs 29.87 lakh crore in July 2026, India’s UPI ecosystem has achieved remarkable scale and depth,” said Kalpesh Mantri, Assistant Director at CareEdge Advisory.

This strong growth reflects increasing adoption, expanding reach and the robustness of India’s digital payments infrastructure, positioning UPI for continued expansion and deeper integration across use cases. India’s payments ecosystem has undergone a structural transformation from being cash-led to digitally dominant, with digital modes accounting for 99.8 per cent of the total transaction volume and 97.9 per cent of value as of Q1FY27.