Govt mulls MDR charge or “tiered incentives” to make UPI financially self-sustaining

The Indian government is considering implementing a Merchant Discount Rate (MDR) charge or a tiered incentives system to make the Unified Payments Interface (UPI) financially self-sustaining. This move aims to address the significant funding gap between the allocated Rs 2,000 crore and the estimated operational cost of Rs 20,700 crore. If implemented, this change could impact merchants and consumers who use UPI services, potentially increasing transaction costs. The outcome will be crucial for the long-term viability of UPI, a key component of India's digital payment infrastructure.

Why it matters

The Indian government is exploring ways to make UPI financially self-sustaining. This could lead to changes in the payment landscape, but the impact is uncertain.

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Related coverage

• RBI has funds to pay for UPI platform without having to charge merchants, customers The Hindu · 2026-08-05

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