IIT Bombay study recommends lowering UPI MDR share for third-party apps
12 Oct 2026Updated 41 min ago1 source
An IIT Bombay study has recommended reducing the Merchant Discount Rate (MDR) share for Third-Party Application Providers (TPAPs) to 0.06%, which is lower than the 0.08% proposed by the National Payments Corporation of India (NPCI). The report suggests keeping the Payment Service Provider (PSP) share at 0.02%, while proposing that banks, which currently receive a 70% revenue share, should forgo their portion.
NIKAN Intelligence
What happened
An IIT Bombay report has suggested lowering the UPI Merchant Discount Rate (MDR) share for Third-Party Application Providers to 0.06%. It also recommended that banks should forgo their current majority revenue share of 70% split between issuing and acquiring transactions.
Why it matters
Changes to the UPI revenue distribution model directly impact fintech companies, digital payment providers, and major commercial banks, influencing how digital transaction ecosystems are funded.
What we know
- IIT Bombay study recommended setting the TPAP MDR share at 0.06%
- The NPCI had previously proposed a TPAP MDR share of 0.08%
- The PSP share is recommended to remain unchanged at 0.02%
- Banks currently take the bulk of the revenue with a 70% split between issuer and acquirer
What we don't know
- Whether the National Payments Corporation of India or the Reserve Bank of India will adopt these recommendations
- The official response of major banks regarding the proposal to forgo their share
Generated by NIKAN's analysis engine from the cited reports only. Nothing here is invented; gaps are shown as unknowns. Always read the original coverage linked below.
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