Payment apps could earn $1.1 billion annually from the MDR fees levied on UPI by March 2028. PhonePe and Google Pay are said to receive approximately ₹7,500 crore from this.

Payment apps will benefit from the earnings from MDR charges levied on UPI.

On September 15th, the government decided to impose an MDR charge on UPI payments. This decision has been the subject of considerable debate ever since. Some merchant organizations are also protesting this decision. Meanwhile, information is now emerging about the benefits of this payment method. According to reports, this new charge could boost the revenue of payment companies.

In fact, according to brokerage firm Bernstein, this new fee could generate additional revenue for payment apps of up to $1.1 billion annually by March 2028. Considering the current market share, PhonePe and Google Pay could account for approximately $900 million (approximately Rs. 7,500 crores).

Walmart-backed PhonePe and Google Pay dominate
the UPI market. According to data from last month, the two companies together accounted for nearly 80% of total UPI transaction value. The new fees will provide these companies with more money, allowing them to invest more in technology, reaching new customers, and expanding into smaller towns and rural areas.

Fees coming into effect on October 15th:
According to the government's decision, a merchant fee of 0.4% will be levied on UPI transactions exceeding ₹2,000 in India. This rule is set to come into effect on October 15th. If this happens, merchant fees will return to UPI after nearly six years. Until now, merchants were not charged such fees for payments made using UPI.

One concern about the new fees is that merchants
may pass on this additional expense to customers. However, retailers and industry insiders involved in the report say that people have become increasingly reliant on UPI for everyday payments. Therefore, it's unlikely that people will return to using cash on a large scale.