New Delhi, September 16 (Daily Kiran) : The introduction of a Merchant Discount Rate (MDR) in UPI payments is poised to create new revenue streams for banks and payment companies, potentially increasing the overall industry revenue pool to between ₹10,000 crore and ₹20,600 crore. This insight comes from various brokerage firms.
The National Payments Corporation of India (NPCI), which manages the Unified Payments Interface (UPI), announced that starting October 15, a 0.4% MDR will be applied to person-to-merchant (P2M) UPI transactions exceeding ₹2,000. Importantly, the maximum charge for any transaction will be capped at ₹300, and this cost will be borne by the merchant rather than the customer.
UBS estimates that the annual revenue pool for banks and payment companies could reach between ₹10,000 crore and ₹15,000 crore. They project that banks will retain approximately 60% to 70% of this revenue, with the remainder going to payment companies. Morgan Stanley believes that fintech firms will be particularly affected by this new structure.
Goldman Sachs has projected that the industry’s potential revenue pool could hit ₹20,600 crore. This estimate is based on the assumption that about half of the total UPI transaction value will fall under the 40 basis points MDR. According to JP Morgan, the maximum revenue pool could be around ₹17,000 crore, which would include nearly ₹11,700 crore for issuing and acquiring banks. This amount represents approximately 2.1% of the net profit of listed commercial banks for the fiscal year 2026.
Citibank’s forecast suggests that the annual industry revenue pool will be between ₹16,000 crore and ₹17,000 crore, with banks expected to receive about 60%, UPI application providers around 25%, and non-bank payment aggregators the remaining 15%.
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