India Weighs MDR Fee on UPI as Cash Use Rebounds
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- India's government is considering an MDR (Merchant Discount Rate) charge on UPI transactions, potentially ending the system that built India's reputation as the world's largest digital payments market.
- UPI cash usage data shows Indians are returning to cash even as the government weighs the new merchant fee, a signal that the free-ride era may already be eroding user behavior, per thehindu.com.
Why it matters: Introducing MDR would transfer costs from banks and the government to merchants, with small and mid-sized merchants—who powered UPI's volume growth—most exposed. The simultaneous uptick in cash use, per The Hindu's reporting, suggests consumers may already be drifting back to physical currency, undermining the very digital adoption UPI was designed to lock in.
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