Archive · 20 Aug 2026
Former RBI Official Backs MDR on High-Value UPI Transactions
UPI is a system people use to make digital payments.
G. Padmanabhan, a former Reserve Bank of India official, said UPI needs steady income to keep improving.
He supported charging MDR on some high-value UPI payments.
MDR is a fee connected with processing certain payments.
He said small-value transactions would still be free for users.
The money could help pay for better technology and stronger cybersecurity.
Padmanabhan said the government’s reimbursement costs were not the main reason for the proposed change.
He also said the RBI may consider higher interest rates if it sees inflation risks.
He explained that this guidance reflects what the central bank observes in the economy.
G. Padmanabhan said UPI needs a sustainable revenue model to fund technology, cybersecurity and infrastructure.
He supported proposed Merchant Discount Rate charges on high-value UPI transactions.
Padmanabhan said small-value UPI transactions would remain free for users under the proposed changes.
He argued that MDR could make the digital-payments system more transparent and financially sustainable.
He said the RBI’s forward guidance on interest rates reflects concerns about possible inflation.
- Who
- G. Padmanabhan, former Executive Director of the Reserve Bank of India and former Chairman of Bank of India.
- What
- He supported proposed Merchant Discount Rate charges on high-value UPI transactions and discussed the RBI’s interest-rate guidance.
- When
- Thursday, during the Global Fintech Fest 2026.
- Where
- Mumbai.
- Why
- He said UPI needs sustainable revenue to fund technology, cybersecurity, infrastructure and investment, while the RBI’s guidance reflects possible inflation risks.
Support for MDR
Concern Over MDR
Effect on UPI
Support for MDR
Padmanabhan said charges on high-value transactions could make the system more transparent and financially sustainable without affecting free small-value payments.
Concern Over MDR
The concern raised in the discussion was that MDR charges could weaken UPI, although Padmanabhan rejected that view.
Reason for the proposal
Support for MDR
Padmanabhan said the payments ecosystem needs revenue to fund continuous upgrades, security improvements and capital investment.
Concern Over MDR
One view was that the main purpose of the charges could be reducing the government’s reimbursement burden; Padmanabhan said reimbursement was only a small part of the government’s overall finances.
- Speaker
- G. Padmanabhan
- Proposed charge
- Merchant Discount Rate on high-value UPI transactions
- Small-value payments
- Expected to continue without charges for users
- Purpose of revenue
- Supporting technology, cybersecurity and infrastructure investments
- Government reimbursement
- Padmanabhan said reducing reimbursement costs was not the primary reason for the proposal
- Interest-rate guidance
- The RBI’s forward guidance reflects its assessment of inflationary risks
- Event
- Global Fintech Fest 2026