Archive · 2 Oct 2026
Payment Aggregators Seek Larger Share of New UPI MDR
Payment aggregators help merchants accept digital payments.
A new fee will be charged on some UPI payments starting October 15.
The fee is 0.4% for transactions above Rs 2,000.
Banks are supposed to receive 0.12% of the transaction value.
Aggregators want to receive much of that bank share because they provide technology and bring merchants to the banks.
Bigger companies may have more power to negotiate than smaller ones.
Some aggregators are considering becoming direct acquirers through NPCI instead of working through sponsor banks.
They say this could help them keep more revenue and introduce new products faster.
Payment aggregators are negotiating to retain 50-80% of acquiring banks’ 0.12% share of the new UPI MDR.
The framework sets a 0.4% MDR on UPI transactions above Rs 2,000, beginning October 15.
A Rs 10,000 transaction would generate Rs 40 in MDR, with Rs 12 allocated to the acquiring bank.
Large aggregators may secure better terms because of their transaction volumes, merchant bases and technology relationships.
Some payment firms may seek direct NPCI acquiring membership to retain the full acquiring-bank share.
- Who
- Payment aggregators, sponsor banks, NPCI and the government are involved; large aggregators include Razorpay, Cashfree, PayU and Pine Labs.
- What
- Payment aggregators are negotiating for 50-80% of acquiring banks’ share of the new UPI merchant discount rate and may seek direct acquiring membership.
- When
- The negotiations are expected to conclude before the new MDR takes effect on October 15.
- Where
- The arrangements concern India’s UPI ecosystem, with the potential direct-membership precedent involving GIFT City.
- Why
- Aggregators want a larger share of MDR revenue and believe direct access could help them retain more income and launch products faster.
Payment Aggregators
Sponsor Banks and Existing Structure
MDR revenue split
Payment Aggregators
Aggregators want to retain 50-80% of the acquiring bank’s 0.12% share, reflecting the technology, infrastructure and merchant business they provide.
Sponsor Banks and Existing Structure
The current framework assigns the 0.12% share to acquiring banks, leaving aggregators to negotiate their portion individually with sponsor banks.
Direct acquiring membership
Payment Aggregators
Some payment firms may seek direct NPCI membership so they can retain the entire acquiring-bank share and introduce products faster.
Sponsor Banks and Existing Structure
Under the existing model, acquiring banks provide the settlement account and NPCI connectivity, while aggregators operate much of the technology and payment infrastructure.
Negotiating power
Payment Aggregators
Large aggregators argue that high transaction volumes, merchant floats and technology relationships justify better commercial terms.
Sponsor Banks and Existing Structure
Smaller aggregators may have less bargaining power, while banks can differentiate terms based on the business and merchant volumes each aggregator brings.
- New UPI MDR
- 0.4% on transactions above Rs 2,000
- Acquiring-bank share
- 0.12% of the transaction value
- Negotiated PA share
- Payment aggregators are seeking 50-80% of the acquiring bank’s share
- Example transaction
- A Rs 10,000 transaction generates Rs 40 in MDR, including Rs 12 for the acquiring bank
- Effective date
- October 15
- Flat-fee categories
- Railways, telecom, insurance and fuel are charged Rs 5 per transaction under the described arrangement
- Potential structural change
- Some aggregators may apply for direct NPCI acquiring membership