NPCI tells Supreme Court zero MDR for UPI transactions is no longer sustainable
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Fiscal sustainability of Digital Public Infrastructure: a GS3 Economy and Financial Inclusion case study.
Why in news
The National Payments Corporation of India (NPCI) informed the Supreme Court that maintaining a zero Merchant Discount Rate (MDR) for all UPI transactions is unsustainable due to high functional costs.
Background
NPCI reported that UPI processed 241.62 billion transactions in Financial Year 2025-26. The corporation proposed a 0.4% MDR specifically for person-to-merchant transactions exceeding ₹2,000.
Facts for Prelims
- FactUPI processed 241.62 billion transactions in FY 2025-26
- FactProposed MDR of 0.4% applies only to person-to-merchant transactions above ₹2,000
- BodyNPCI: National Payments Corporation of India
Prelims practice question
What is the proposed Merchant Discount Rate (MDR) for person-to-merchant UPI transactions exceeding ₹2,000?
- (a)0.5%
- (b)1.0%
- (c)0.4%
- (d)0.1%
Show answer
Answer: (c) 0.4% — The NPCI proposed a 0.4% MDR for person-to-merchant transactions exceeding ₹2,000.
For Mains
Q. Discuss the economic implications of transitioning from a zero-MDR model to a fee-based structure for UPI transactions in India.
Dimensions to cover in your answer
- Fiscal burden: High operational costs of zero-MDR model impacting the public exchequer
- Digital inclusion: Potential impact on small merchants and micro-transactions under ₹2,000
- Market sustainability: Balancing free public access with the infrastructure costs of real-time payment systems
Keywords: Merchant Discount Rate · Digital Public Infrastructure · Fiscal Sustainability · Real-time Payments · Financial Inclusion
More Economy notes
- West Bengal government launches new industrial promotion policy to attract large investments · 6 November 2026
- The State Planning Board approved an Approach Paper for the 15th Five Year Plan · 5 November 2026
- Finance Ministry advances ₹1,09,019 crore tax devolution to help states accelerate capital spending · 5 November 2026
- 72.6% of migrants from 3 northeastern States work outside their home State · 5 November 2026
- Over 83% of vehicles passed without stopping at NHAI's new Paranur toll system · 5 November 2026
- Karnataka allocates record ₹10,000 crore for rural road development under CM's approval · 4 November 2026
Something wrong, or something missing?
Spotted a mistake in a note, or want a topic, format or PDF that would help your preparation? Write to us. We read every mail and fix errors fast.
This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.