Negative impactEconomy
UPI MDR: From 0.40% to 0.08% what IIT Bombay report has proposed and why it wants new fee structure, explained
Mint 1 hr ago·12 Oct 2026, 12:27 pm
The Reserve Bank of India (RBI) has proposed reducing the Merchant Discount Rate (MDR) for UPI transactions from 0.40% to 0.08%. This significant cut is intended to lower the cost of digital payments for merchants and encourage further adoption of the Unified Payments Interface. The IIT Bombay report supports this move, arguing that the previous fee structure was too high and that the new, lower rate is more sustainable for the digital ecosystem.
For investors, this policy shift is a positive development for the broader financial sector. Lower transaction costs can boost the volume of digital payments, potentially benefiting fintech companies and payment gateways. However, the report also cautions that while merchants cannot directly charge customers, the cost savings might eventually influence the pricing of goods and services, which could have a minor impact on inflation and consumer spending.
Investors should watch for the official implementation timeline and any subsequent guidelines from the RBI. The success of this fee reduction will depend on how effectively it drives digital adoption and whether it leads to increased transaction volumes across the market.
Excerpt from Mint
The revised MDR fee framework for UPI transactions could burden consumers through higher retail prices, even as merchants are barred from directly passing on the charges, an IIT Bombay report has warned, calling for changes to the proposed model. A technical report by researchers associated with IIT Bombay has warned…Read the original at Mint
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- Category: Economy.
- AI reads the tone as negative (potentially bearish) for the stock.
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