Big to get bigger: India's UPI fee shift to entrench dominant incumbents

India’s Unified Payments Interface (UPI) is set to stop being free on October 15, after regulators approved a merchant fee, called the merchant discount rate (MDR), of 0.4% on transactions above 2,000 rupees (about $21). The change is expected to create a new revenue pool that could generate up to $1.1 billion annually for payment apps by March 2028, estimates from Bernstein suggest. PhonePe and Google Pay together handled 80% of UPI payment values last month, implying they could receive roughly $900 million. Industry sources say the extra funds may help them expand into rural areas. Regulators may face renewed questions about concentration.