Stories
NPCI Reintroduces UPI MDR After 6 Years: Dilip Asbe Explains Why
- •NPCI MD & CEO Dilip Asbe explains the reintroduction of UPI MDR, citing the need for greater investment and resilience in the payments ecosystem as costs rise.
- •UPI was free for six years until 2020; Asbe acknowledges the difficulty of reinstating charges but emphasizes the need for the ecosystem to survive and thrive.
- •The MDR structure was decided based on cost recovery, creating exclusions (96% of UPI transactions by value and 75% of merchants remain unaffected), and targeting businesses already paying MDR.
- •UPI Autopay and capital markets are exempt from MDR to support investments and ensure fairness across the ecosystem.
- •A potential ‘UPI fund’ of ‘3,000 crore aims to expand UPI use among 60 million active merchants, with a focus on providing soundboxes and driving future growth through credit and wider access.
Key Questions Answered
NPCI MD and CEO Dilip Asbe stated that the MDR is being reintroduced to provide necessary investment and resilience to the payments ecosystem as operating costs rise. With transaction costs and cybersecurity challenges growing rapidly, the revenue generated will help maintain and secure the infrastructure.
Person-to-person (P2P) transfers, merchant payments up to ₹2,000, and specified small merchants remain completely outside the MDR framework. Additionally, capital market transactions and UPI Autopay mechanisms have been kept exempt.
The proposed ₹3,000 crore UPI fund aims to expand the adoption of UPI among merchants and customers by enabling infrastructure rollouts, such as providing soundboxes to merchants who currently only use paper-based QR codes.
