The National Payments Corporation of India has emphasized the necessity of implementing a Merchant Discount Rate for UPI transactions. According to the organization, the current zero-MDR regime, while successful in driving initial adoption, limits the ability of payment service providers to invest in further innovation and infrastructure upgrades.
The Argument For Sustainable Revenue Models
NPCI argues that a structured MDR framework would provide the financial resources required to enhance security, improve transaction success rates, and expand the reach of digital payments to underserved regions. By creating a sustainable revenue model, the industry can better support the growing volume of UPI transactions and maintain the robustness of India’s digital payment ecosystem.