UPI MDR Could Create Annual Revenue Pool of Up to Rs 20,000 Crore: Brokerages

New Delhi, September 16, 2026 (Yes Punjab News)

The introduction of a Merchant Discount Rate (MDR) on select high-value UPI payments could create an annual revenue pool of up to Rs 20,000 crore for banks and digital payment providers, according to estimates by leading brokerages.

Goldman Sachs has estimated the potential industry revenue pool at around Rs 20,600 crore, based on its assessment that nearly half of the overall UPI transaction value could attract the full 40-basis-point MDR.

Morgan Stanley expects the move to have a significant impact on payment-sector earnings. It estimates that EBITDA for some digital payment providers could rise by 38-48 per cent in FY28/FY29, while another major provider could see adjusted EBITDA increase by 24-29 per cent.

UBS has estimated an annual revenue pool of Rs 10,000-15,000 crore for banks and payment companies, with banks retaining around 60-70 per cent and the remainder accruing to digital payment providers.

JPMorgan has pegged the maximum potential revenue pool at around Rs 17,000 crore, including approximately Rs 11,700 crore for issuing and acquiring banks. The brokerage said the latter figure would be equivalent to about 2.1 per cent of the FY26 net profit of listed commercial banks.

Citi has estimated annual ecosystem revenue at Rs 16,000-17,000 crore, with around 60 per cent accruing to banks, 25 per cent to UPI application providers and 15 per cent to non-bank payment aggregators.

The National Payments Corporation of India (NPCI) has introduced a 0.4 per cent MDR on specified person-to-merchant UPI transactions above Rs 2,000, effective October 15. The MDR will be capped at Rs 300 for transactions of Rs 75,000 and above. The charge will be borne within the merchant payment ecosystem and not by consumers.

Person-to-person UPI transactions will remain free, while payments to merchants up to Rs 2,000 and specified zero-MDR transactions for small merchants will also remain exempt. The government said around 96 per cent of all P2M transactions will remain unaffected.

The eventual impact on individual banks, fintech companies and payment providers will depend on how the MDR revenue is distributed across the UPI ecosystem.