• Transaction fee scope: Person-to-person payments and roughly 95% of UPI transactions remain free of MDR, with the 0.4% charge applying only to the 4% to 4.5% of merchant transactions exceeding ₹2,000.
• Fintech processing costs: Fintech companies process UPI at a loss with server costs running between 16 and 20 paise per transaction, while past government subsidies covered only around 10% of total operating expenses.
• Merchant credit benefits: Transparent digital transaction history allows merchants to access working capital loans and overdraft limits from banks, while the 0.4% rate remains significantly lower than credit card MDR of 1.8%.
• Transaction splitting caution: Experts strongly advise merchants against splitting invoices into sub-₹2,000 payments to avoid fees, noting it creates customer friction and harms their credit profile for bank loans.
• Ecosystem expansion target: The new revenue framework is designed to fund core banking and cybersecurity upgrades, helping scale UPI from 100 crore to 500 crore daily transactions and expanding user reach from 60 crore to 120 crore.