Archive · 11 Oct 2026
IIT Bombay Calls for Changes to Proposed UPI Merchant Fees
UPI is a way for people and businesses in India to make digital payments.
An IIT Bombay report says the proposed fees for some UPI payments should be changed to protect people’s trust in the system.
It says UPI’s convenience and other benefits may be worth more than the extra money collected through fees.
The report suggests charging only merchants whose yearly sales are above Rs 50 crore.
It also says people should not face MDR when collecting debts or repaying loan instalments through UPI.
NPCI’s proposal would charge merchants, not consumers, for some larger merchant payments, while most everyday payments would remain free.
The report says the Reserve Bank should decide the rules under a 2007 law.
An IIT Bombay report says the proposed UPI merchant discount rate framework should be revised to protect public trust.
The report argues that UPI’s wider benefits, including convenience and productivity gains, outweigh incremental income from merchant fees.
It recommends applying MDR only to merchants with annual turnover above Rs 50 crore, which it says would cover about 90 per cent of NPCI’s proposed MDR.
The report recommends exempting UPI debt collection and loan EMI repayments from MDR to support financial inclusion and avoid friction for borrowers.
NPCI’s circular sets charges for certain merchant payments above Rs 2,000; the report says the Reserve Bank should decide UPI MDR under the 2007 Act.
- Who
- IIT Bombay issued the report; NPCI operates UPI, and the report says the Reserve Bank should decide UPI MDR.
- What
- The report recommends revising the proposed UPI merchant discount rate framework.
- When
- NPCI issued its circular on September 15; the report calls for revising the framework before implementation.
- Where
- India.
- Why
- To protect public trust, balance UPI ecosystem revenue with accessibility, and keep loan repayments and debt collection affordable.
IIT Bombay report
NPCI proposal
Whether the framework needs revision
IIT Bombay report
The report says the proposed framework should be rationalised to protect public trust and preserve UPI’s accessibility and acceptance.
NPCI proposal
NPCI’s circular provides for charges on certain UPI transactions, aiming to create a sustainable revenue framework for the digital payments ecosystem.
Which transactions should be charged
IIT Bombay report
The report recommends limiting MDR to merchants with annual turnover above Rs 50 crore and exempting debt collection and loan EMI repayments.
NPCI proposal
NPCI’s proposal sets charges for certain person-to-merchant payments above Rs 2,000, with stated rates or flat fees for specified categories.
- Report
- “UPI at a Crossroads: Reintroducing the MDR,” released by IIT Bombay.
- Suggested turnover threshold
- Restrict MDR to merchants with annual turnover above Rs 50 crore.
- Share of proposed MDR covered
- About 90 per cent, according to the report.
- NPCI proposed rate
- 0.4 per cent on certain person-to-merchant UPI payments above Rs 2,000.
- Transaction cap
- Rs 300 for transactions of Rs 75,000 or more.
- Other stated charges
- A flat Rs 5 for certain essential-service transactions above Rs 2,000; 0.02 per cent for specified capital-markets transactions, capped at Rs 300.
- Loan-related payments
- The report recommends no MDR on UPI debt collection and loan EMI repayments.
- Legal framework
- The report says the Reserve Bank should decide UPI MDR within the Payment and Settlement Systems Act, 2007.
