Positive impactSector
IIT-B report wants UPI MDR cut; says banks should forgo their share
Times of India 1 hr ago·12 Oct 2026, 11:30 am
A recent study by the Indian Institute of Technology (IIT-B) has recommended a significant reduction in the Merchant Discount Rate (MDR) charged on UPI transactions. The report suggests lowering the MDR for Third-Party Application Providers (TPAPs) to 0.06%, which is slightly below the current 0.08% proposed by the National Payments Corporation of India (NPCI). The study further recommends keeping the Payment Service Provider (PSP) share unchanged at 0.02%. This proposal aims to reduce the cost burden on merchants, potentially making digital payments more attractive for small businesses.
This development matters to investors as it signals a potential shift in the revenue-sharing model of the digital payments ecosystem. Currently, banks that issue and acquire transactions collectively receive the majority of the revenue, with a 70% share split between them. A lower MDR could compress the margins for these banking entities, while the impact on the broader market will depend on how the industry responds to the recommendation.
Investors should watch for the official response from the Reserve Bank of India (RBI) and the NPCI regarding the study's findings. The final policy decision will determine the financial implications for banks, fintech firms, and payment aggregators, ultimately shaping the profitability of the digital payments sector in the coming quarters.
Key takeaways
- Category: Sector.
- AI reads the tone as positive (potentially bullish) for the stock.
- Assessed as a significant, market-relevant update.
Why it matters
A meaningful update worth tracking. The tone is positive — historically associated with upward pressure, though not predictive. Use the price and stock snapshot to gauge how the market is responding.
