could capture another Rs 5,400-6,800 crore, while beneficiary or acquiring banks could receive roughly Rs 1,400-2,700 crore, according to Bernstein’s illustrative distribution.
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The estimates are based on an effective MDR considerably lower than the headline 40 bps because large parts of the UPI payment pool either remain exempt or attract concessional charges. Bernstein expects UPI person-to-merchant transaction value to rise from around Rs 100 lakh crore currently to Rs 144 lakh crore by FY28, with the blended effective MDR working out to about 19 bps, yielding the Rs 27,000-crore annual pool.
“After adjusting for exempt transactions and concessional MDR categories, we estimate the effective MDR on total UPI P2M transaction value at ~19bps,” said Pranav Gundlapalle, India Head of Financials at Bernstein.
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Transactions below Rs 2,000, which account for about 33% of P2M transaction value, remain free. AutoPay mandates are also exempt, while capital-market payments attract only 2 bps. Categories including fuel, telecom, insurance, education, utilities and railways will be charged a flat Rs 5 on eligible transactions. Only about 40% of total P2M value will ultimately attract the full 40-bps MDR.
For UPI service providers, however, the levy is likely to function more as a sustenance fee than a major profit pool, providing revenue to support the cost of running and expanding the payments infrastructure. “PCI has consistently maintained that UPI needs a sustainable economic model to support its scale,” said Vishwas Patel, managing director and CEO, , and Chairman, Payments Council of India.
He said banks, fintechs and payment aggregators need sustained investment in infrastructure, cybersecurity, fraud prevention, technology and customer service.
Reeju Datta, co-founder of Cashfree, said the levy remained well below card fees and left the overwhelming majority of UPI transactions untouched.
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