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SBI Rejects Apple Pay, Backs UPI MDR to Fund Tech Upgrades
- •State Bank of India (SBI) declined to participate in the Apple Pay ecosystem after evaluating commercial propositions.
- •SBI is preparing to implement a new 0.4% Merchant Discount Rate (MDR) on UPI transactions above –2,000, effective October 15, 2027.
- •The new UPI fee structure will primarily affect a specific segment of merchant transactions, with 96% of person-to-merchant UPI volumes remaining exempt.
- •SBI views the MDR as a mechanism to offset significant investments in infrastructure, cybersecurity, and fraud risk management.
- •The bank aims to expand its presence across the payments value chain, targeting components where it can add value for merchants.
Key Questions Answered
State Bank of India decided against joining Apple Pay after evaluating the commercial proposition and its internal business alignment. Although Apple Pay initially approached India's largest lender when entering the market through Axis Bank, SBI's management ultimately chose not to participate at this time, though the stance could change in the future.
Starting October 15, 2027, SBI and other institutions will implement a 0.4% Merchant Discount Rate on UPI transactions exceeding ₹2,000. However, 96% of person-to-merchant UPI volumes fall under the ₹2,000 threshold and remain entirely exempt, ensuring everyday customers pay no extra charges.
SBI management views the new MDR not as a major revenue generator, but as a mechanism to help offset massive infrastructure investments. Specifically, the incoming funds will support ongoing technological upgrades, cyber security enhancements, and stronger risk and fraud management measures.
