Payment aggregators demand fixed, direct share of UPI MDR

Payment aggregators in India have collectively called for a fixed and direct share of the merchant discount rate (MDR) applied to Unified Payments Interface (UPI) transactions. The industry group argues that a clear, predetermined share would provide greater certainty for businesses that rely on aggregators to process payments. They contend that the current arrangement, which often involves indirect or variable allocations, creates opacity and hampers planning. The demand is being directed at regulators and the bodies that set UPI pricing structures, with the aim of establishing a transparent framework. Stakeholders say that a fixed share could also promote competition among aggregators while safeguarding merchant interests.

The push comes as UPI continues to dominate digital payments in India, handling billions of transactions monthly. Aggregators, which act as intermediaries between merchants and banks, play a crucial role in onboarding merchants and ensuring transaction smoothness. By seeking a direct slice of the MDR, they hope to align revenue streams more closely with the services they provide.

Industry observers note that any change to the MDR sharing model would require coordination with the National Payments Corporation of India (NPCI) and possibly amendments to existing guidelines. The aggregators have indicated readiness to engage in dialogue with policymakers to reach a mutually acceptable solution.