The UPI (Unified Payments Interface) payment system has transformed digital payments in India. As a result, businesses want to keep up with this evolving payment landscape.
Although companies cannot earn money directly from the UPI model, around 50 new payment apps in India plan to launch UPI services soon.
NPCI’s Insights on UPI Adoption
A senior official from the National Payments Corporation of India (NPCI), which oversees the UPI service, has stated that even without the Merchant Discount Rate (MDR), many new third-party apps are interested in offering UPI for real-time payments.
Dilip Abse, the Managing Director and CEO of NPCI, acknowledged that the lack of a clear income model has deterred companies from adopting UPI in recent years.
However, he noted a surge in interest, with at least 50 new payment apps now wanting to enter the UPI market. He shared this information in an interview with Moneycontrol.
Currently, UPI transactions are free for users, with fintech companies and banks covering the processing costs. This free service is expected to continue in the future.
Understanding Merchant Discount Rate (MDR)
Merchant Discount Rate (MDR) is a fee that companies charge merchants for using their payment services.
It serves as the main income source for credit card companies. Since UPI operates on a peer-to-peer network, it does not have an MDR.
However, some payment companies have found alternatives, such as soundboxes, digital QR codes, and POS systems, to generate income through UPI payments.
