UPI Transactions Surge As Government Evaluates Merchant Discount Rate Reintroduction

India's Unified Payments Interface continues to demonstrate massive growth, with transaction volumes rising 23 percent year-on-year to exceed 22 billion in June 2026. The total value of these transactions reached over ₹28 lakh crore, with the system processing an average of 757 million transactions daily, underscoring its role as the backbone of India's digital economy.

Despite this success, the government is currently evaluating a proposal to reintroduce merchant discount rate charges for large merchants. This policy consideration stems from concerns regarding the financial sustainability of banks and payment service providers, who have struggled with revenue compression under the existing zero-MDR framework. The proposal aims to balance the needs of financial institutions with the continued growth of digital payments.

Officials have clarified that the potential reintroduction of MDR would be targeted specifically at large-scale merchants. The government intends to maintain the zero-cost model for small merchants and lower-value transactions to ensure that mass adoption remains unaffected. This strategic approach seeks to preserve the accessibility of UPI for the general public while addressing the long-term viability of the digital payment infrastructure that supports millions of daily transactions across the country.