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What IIT Bombay is reported to recommend
NDTV Profit and PTI/The Economic Times coverage of IIT Bombay’s report, UPI at a Crossroads: Reintroducing the MDR, describes a proposal to focus MDR on larger businesses rather than apply charges broadly. These are secondary accounts; the report text itself is not available in the cited coverage, so the recommendations should be treated as reported rather than as verified wording from the authors.
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Focus charges on large merchants
The coverage says the report recommends charging merchants with annual turnover of ₹50 crore or more. NDTV Profit reports that this group could account for about 90% of revenue proposed under NPCI’s framework. That 90% figure is an estimate reported by NDTV, not a measured outcome.
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Protect credit servicing and debt collection
The report is also reported to recommend excluding loan repayments, EMIs and debt collections from MDR. This would distinguish ordinary merchant sales from payments used to repay credit or collect debt.
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Consider charges for online person-to-merchant payments
The coverage says the report recommends considering reasonable charges on online person-to-merchant (P2M) transactions, including e-commerce. It does not establish a specific rate for those payments. The reported approach seeks to balance provider remuneration with affordability, public trust and broad UPI acceptance.
What the Ministry of Finance’s framework says
The Ministry of Finance’s September 15, 2026 release describes an announced MDR framework, which is distinct from IIT Bombay’s reported recommendations. The ministry’s stated rates apply to specified categories and are not a universal fee on every UPI payment.
| Payment or merchant category | Ministry-stated treatment |
|---|---|
| Person-to-person (P2P) transfers | Remain free regardless of amount. |
| Merchant payments up to ₹2,000 | Remain free of MDR. |
| Qualifying small merchants in the P2PM category | Exempt if they receive up to ₹1 lakh per month through UPI QR codes. |
| Specified P2M payments above ₹2,000 | 0.4% MDR, capped at ₹300 for transactions of ₹75,000 and above. |
| Specified essential-sector payments above ₹2,000 | Flat ₹5 MDR for sectors including railways, telecom, insurance, fuel and agricultural inputs. |
| Specified capital-market payments | 0.02% MDR, capped at ₹300. |
These rates and exemptions are the Ministry’s description of its framework, not the IIT Bombay report’s proposed fee structure. The Ministry says MDR is a merchant-side ecosystem charge, not a government tax or a customer charge. It says banks must ensure merchants do not pass MDR on to customers, and UPI app providers may not impose hidden or platform charges. In its release, the Ministry stated: “MDR is neither a tax nor a charge collected by the Government or NPCI.”
Why the 0.08% claim needs qualification
A commentary source refers to 0.08% as an app-provider share within a fee split. That is not evidence that IIT Bombay recommended an overall MDR of 0.08%. The available report coverage does not confirm that specific overall rate, so it should not be presented as the report’s proposal without the report text or a direct statement from its authors.
The difference matters: an overall MDR is the merchant-side charge, while a share allocated to an app provider is only one component of how a fee might be distributed. The reported ₹50 crore turnover threshold and the reported exemptions for credit repayments and debt collection are the report’s identifiable policy recommendations in the available coverage; a 0.08% total rate is not.
How the reported proposal differs from the announced framework
| Issue | IIT Bombay report, as described in coverage | Ministry of Finance framework |
|---|---|---|
| Who may face MDR | Reported recommendation: focus charges on merchants with annual turnover of at least ₹50 crore. | Specified P2M categories above ₹2,000 carry rates; qualifying small P2PM merchants are exempt. |
| Rate and threshold | The cited coverage does not establish an overall rate of 0.08% or a new general transaction threshold. | Specified P2M payments above ₹2,000 carry 0.4%, with stated caps and sector-specific exceptions. |
| E-commerce and essential sectors | Coverage reports a recommendation to consider reasonable charges on online P2M payments, including e-commerce. | The Ministry describes a flat ₹5 MDR for specified essential-sector payments above ₹2,000 and a separate rate for specified capital-market payments. |
| Loan repayments and debt collection | Reported recommendation: exclude loan repayments, EMIs and debt collections. | The September 15 release’s listed framework does not establish a matching IIT Bombay recommendation; it describes the Ministry’s specified categories and rates. |
| Who pays | The coverage frames the proposal as a way to remunerate the ecosystem while protecting affordability and acceptance; it does not establish a separate customer charge. | The Ministry says MDR is merchant-side and must not be passed on to customers. |
Why MDR is being debated
The Ministry’s August 8, 2026 statement described a proposed amendment to the Payment and Settlement Systems Act as an enabling measure for UPI sustainability, technological advancement, cybersecurity and fraud prevention. It said an NPCI-headed UPI and Services Steering Committee would decide MDR, if any, after the bill passed. The proposal’s rationale, as described by the Ministry, is to support the payment system’s continued operation and development.
The reported IIT Bombay approach addresses the same sustainability question but narrows where charges would fall: on large merchants, while protecting loan servicing and debt collection and allowing consideration of online P2M payments. The policy trade-off is between generating revenue for the payment ecosystem and keeping digital payments affordable and widely accepted.
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What the published figures do—and do not—show
- About 96% unaffected: The Ministry estimates that about 96% of merchant transactions would be unaffected by its framework. This is the government’s estimate, not an independently verified transaction count.
- ₹21,000 crore in annual system costs and ₹13,000–15,000 crore in first-year recovery: The Economic Times attributed these estimates to NPCI CEO Dilip Asbe at the 13th SBI Banking and Economics Conclave. They are estimates, not realized revenue or an independently verified cost audit. Asbe was quoted as saying, “While we cannot fully recover the cost, we said at least reasonably recover so that it incentivises market players to reinvest and grow UPI.”
- About 90% of proposed MDR revenue: NDTV Profit attributes this estimate to the reported ₹50 crore turnover threshold. It is a projection about revenue under NPCI’s framework, not a claim that 90% of merchants would pay.
What UPI users and merchants should take away
- Consumers should not treat 0.4% as a fee on every UPI payment: the Ministry’s framework identifies free P2P transfers, free merchant payments up to ₹2,000 and an exemption for qualifying small P2PM merchants.
- For merchants, the announced framework’s rates depend on transaction type, amount and sector. The report’s proposed turnover threshold is a separate recommendation, not a substitute description of the Ministry’s framework.
- The claim that IIT Bombay recommends an overall 0.08% MDR remains unverified in the available coverage. The substantiated reported recommendations are the large-merchant focus and exclusions for loan repayments, EMIs and debt collections.
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