The Unified Payments Interface (UPI) has expanded its global footprint to 11 countries, with the latest additions of Greece and the Maldives joining the network, according to the Press Information Bureau (PIB). The other countries where UPI is accepted include Cambodia, Bhutan, Nepal, Singapore, the United Arab Emirates (UAE), France, Sri Lanka, Mauritius and Qatar. This global expansion holds significant implications as the government has announced that new MDR fees on UPI transactions will apply in some cases, with the charges extending to all 11 countries where UPI is currently functional, as reported by Moneycontrol citing Finance Ministry sources. However, official confirmation on the development is still awaited, with the government's FAQ not explicitly mentioning extending the charges to all 11 countries.
Public sector banks (PSBs) dominate as UPI remitters, with State Bank of India (SBI) accounting for 28% of UPI transactions initiated, followed by Bank of Baroda (BoB) at 7.5%, according to the latest NPCI data. This positions PSBs advantageously under the new MDR framework, as remitter banks receive the largest revenue share of the 0.4% MDR charged on person-to-merchant transactions above ₹2,000 effective October 15, 2026. SBI expects to generate surplus revenue from the new UPI merchant discount rate (MDR) charges, anticipating 40 basis points of the transaction value under the new structure. The bank also operates payment gateway services and maintains presence in UPI applications, positioning it advantageously to capture multiple revenue streams.
Private banks lead on the merchant-side transactions, with Yes Bank receiving 41% of UPI transactions, followed by Axis Bank at a little over 10%, as reported by NPCI data. This dominance in the beneficiary or merchant-side transactions positions private banks to capture significant portions of the new MDR revenue. Axis Bank has a market-leading position in the UPI payer-side PSP space, with a market share of around 38% by volume, while also maintaining 22.1% market share in merchant acquiring in India. SBI, Yes Bank, Axis Bank and a few others are expected to be among the major beneficiaries of the proposed MDR structure, with some brokerages estimating the total revenue generation at over ₹20,000 crore for the payments ecosystem.
The National Payments Corporation of India (NPCI) has introduced a 0.4% Merchant Discount Rate (MDR) on select person-to-merchant (P2M) UPI transactions, effective October 15, 2026. This represents the first time MDR has been charged on the hugely successful UPI payments since 2020. Payments above ₹2,000 will attract the standard 0.4% MDR, with a cap of ₹300 for transactions of ₹75,000 and above. The government has explicitly stated that UPI app providers cannot pass this charge on to shoppers as a platform fee or hidden charge, ensuring businesses continue showing the same price to customers regardless of payment mode. A customer paying ₹3,000 via UPI would mean an MDR of ₹12 (0.4% of ₹3,000), while a ₹50,000 payment would carry an MDR of ₹200. Payments up to ₹2,000 continue to carry zero MDR, with this bracket covering the large majority of P2M UPI transaction volume.
The MDR charges will be distributed among issuing banks (0.40%), acquiring banks (0.30%), payment gateways (0.20%), and application services (0.10%) of the transaction value. Essential sectors including railways, telecom, insurance, fuel, and agriculture inputs will have a flat ₹5 MDR for transactions above ₹2,000, as these categories make up close to 17% of P2M UPI volume and around 46% of P2M value. Small merchants with monthly UPI QR receipts under ₹1 lakh remain exempt from the new MDR structure. Small P2PM merchants continue to receive UPI payments at zero MDR, as long as total monthly UPI QR receipts stay within ₹1 lakh. Capital market transactions including mutual funds, securities, brokers, and dealers will have a lower 0.02% rate, capped at ₹300 to support retail investing. A single payment above ₹2,000 does not automatically move you out of the exempt category, with acquiring banks and payment service providers expected to monitor account activity over time before shifting merchants to the standard P2M category.
The government maintains that all person-to-person UPI transactions will remain completely free, irrespective of the amount transferred, with no transaction fee, platform fee or other charge imposed on individuals for sending or receiving money through UPI. According to the government statement, MDR is a charge within the merchant payment ecosystem, and hence does not apply on customers making UPI payments. Banks have been strictly advised to ensure that merchants do not pass MDR charges on to customers, with UPI application providers also expressly prohibited from imposing platform fees or hidden charges. To extend further support to small merchants, a dedicated fund will be established to promote UPI adoption among such people, with an amount equivalent to 5% of total MDR collections contributed to this fund. This provision will protect street vendors, neighborhood shops and other small businesses from additional payment costs.
