The UPI MDR on select person-to-merchant transactions could create an annual revenue pool of up to Rs 20,000 crore for banks and digital payment providers, according to estimates from several brokerages.
Analysts at global brokerage firm Goldman Sachs estimated the industry revenue pool at Rs 20,600 crore, based on its assessment that around half of overall UPI transaction value could attract the full 40 basis point MDR.
UPI MDR could boost payment sector earnings
Another leading brokerage firm Morgan Stanley has expected that the measure to have a major impact on payment sector earnings with estimating that EBITDA for some digital payment providers could rise by 38-48 per cent in FY28/FY29, while another large provider could see adjusted EBITDA increase by 24-29 per cent.
Similarly, UBS pegged an annual revenue pool of Rs 10,000-15,000 crore for banks and payment players with banks retaining about 60-70 per cent and the remainder accruing to digital payment providers.
JPMorgan estimates the maximum revenue pool at around Rs 17,000 crore, including about Rs 11,700 crore for issuing and acquiring banks. The latter figure is equivalent to around 2.1 per cent of FY26 net profit for listed commercial banks, it said.
Citi estimates annual ecosystem revenue at Rs 16,000-17,000 crore, with about 60 per cent accruing to banks, 25 per cent to UPI application providers and 15 per cent to non-bank payment aggregators.
New UPI MDR rules take effect from October 15
On Tuesday, the National Payments Corporation of India (NPCI) introduced a 0.4 per cent MDR on person to merchant UPI transactions above Rs 2,000 that will be effective from October 15.
In addition, the charge will be capped at Rs 300 for transactions of Rs 75,000 and above, with the fee to be paid by merchants and not consumers.
Banks and digital payment providers to share UPI revenue
The eventual impact on individual players will depend on how the MDR is distributed across the UPI ecosystem.
The differing estimates from Goldman Sachs, Morgan Stanley, UBS, JPMorgan and Citi highlight the potentially significant revenue impact while also showing that the final benefit for individual companies will depend on the MDR-sharing structure.
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