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UPI MDR charges: How does it compare to traditional Debit, Credit Card per transaction? Cost difference explained
Mint 1 hr ago·5 Oct 2026, 3:10 pm
The Reserve Bank of India (RBI) has proposed a uniform 0.4% Merchant Discount Rate (MDR) for UPI Person-to-Merchant (P2M) transactions above ₹2,000, starting 15 October 2026. This move aims to standardise digital payment costs and encourage the use of UPI for larger purchases. The new rate is expected to be lower than the current MDR for credit cards, which can be as high as 2%, and competitive with the standard MDR for debit cards, which is typically around 0.5%.
For investors, this policy shift could impact the profitability of payment banks and fintech companies that rely on interchange fees. A lower MDR might squeeze margins for some players, while others may benefit from increased transaction volumes. The uniform rate could also accelerate the shift away from card-based payments toward UPI, potentially altering the competitive landscape in the digital payments sector.
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