How the New UPI MDR Could Expand the Payments Landscape Revenue

New Delhi – The rollout of a merchant discount rate on Unified Payments Interface (UPI) transactions is projected to widen the revenue horizon for banks and digital payment firms. NPCI’s decision to levy a 0.4% fee on person‑to‑merchant UPI transfers exceeding ₹2,000, capped at ₹300 per trade, will take effect from 15 October.

Brokerage analyses indicate that the industry’s collective earnings could jump from the current ₹10,000 cr bracket to as high as ₹20,600 cr, depending on transaction volumes that fall within the MDR range.

UBS forecasts a yearly revenue pool of ₹10,000‑₹15,000 cr, with banks likely to claim 60‑70% of the total, while payment service providers receive the remainder. Morgan Stanley points to a pronounced effect on fintech firms’ bottom lines.

Goldman Sachs calculates a peak potential of ₹20,600 cr, assuming roughly half of all UPI transaction value is eligible for the 40‑basis‑point discount. JPMorgan’s ceiling estimate peaks at ₹17,000 cr, allocating about ₹11,700 cr to issuing and acquiring banks – equating to 2.1% of the net profit of listed commercial banks for FY26.

Citigroup estimates the sector’s annual revenue at ₹16,000‑₹17,000 cr, splitting the gains as 60% for banks, 25% for UPI app providers, and 15% for non‑bank payment aggregators.