From 0.40% to 0.08%: A New Proposal For UPI Payments

An IIT Bombay team has recommended reducing the new Merchant Discount Rate (MDR) on UPI transactions from 0.40% to 0.08%. The researchers argue that a lower rate could adequately cover payment service costs, as banks also earn revenue from deposits. Their proposal also suggests allocating 0.06% to third-party payment apps and 0.02% to bank service providers.