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Sameer Nigam
Sameer Nigam
CEO & Co-Founder, PhonePe
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UPI MDR Explained: PhonePe CEO Sameer Nigam on What the New Policy Means for Digital Payments

📅 Sep 15, 2026 ANI News 10 MIN 8219 VIEWS 15 SEGMENTS · 2 SPEAKERS
PhonePe Founder & CEO Sameer Nigam explains the new UPI Merchant Discount Rate (MDR) policy, saying the 0.4% MDR on large-value merchant transactions will help make the digital payments ecosystem more sustainable. He says around 96% of UPI transactions will remain free, while the additional revenue can support innovation, merchant digitization and expansion into smaller towns and cities. #UPI #UPIMDR #SameerNigam #PhonePe #DigitalPayments #UPIPayments #NPCI #Fintech #DigitalIndia #MerchantPayments #UPITransactions #CashlessIndia #FintechIndia #DigitalPayment #IndiaNews Join ANI's YouTube me...

What Sameer Nigam said

Written from the verified transcript and checked against it. Every figure links to the moment it was said.

Sameer Nigam, CEO of PhonePe, welcomed the government's 0.4% MDR on selected merchant UPI transactions above ₹2,000, noting that 96% of transactions remain free. He said this marks the beginning of a sustainable revenue model after six years of zero MDR, which had caused industry-wide losses. Nigam highlighted that about 500 million citizens currently use UPI, aiming to grow to 800-900 million in 7-8 years, requiring investment. He argued that merchants already pay higher MDR on cards (1.5%-2.25%), making 0.4% among the cheapest globally. He dismissed concerns about reduced usage, noting UPI transactions have grown 100 times to 700-800 million daily. Nigam emphasized that revenue will fund infrastructure, cybersecurity, and expansion, and insisted the biggest beneficiary is the customer, who remains free forever. He drew parallels with Aadhaar, where businesses pay but citizens don't.

Key takeaways

  1. The 0.4% MDR will apply to only 4% of merchant transactions, keeping 96% free, and begins a sustainable revenue model after six years of zero MDR.
  2. UPI transaction volumes have grown 100 times to roughly 700-800 million transactions per day.
  3. About 500 million Indians use UPI today, with a goal of reaching 800-900 million in the next seven to eight years.
  4. The 0.4% rate is among the lowest in the world, compared to credit card MDR of 1.5% to 2.25%.
  5. Revenue from MDR will fund investments in infrastructure, cybersecurity, and expansion into smaller towns.

Numbers and commitments

FigureWhat it refers toTypeAt
0.4% MDR on UPI transactions above ₹2,000 guidance 0:24
96% of UPI transactions that remain free metric 0:24
500 million current UPI users metric 1:35
800-900 million target UPI user base in 7-8 years commitment 1:35
700 to 800 million daily UPI transaction volume metric 4:08
1.5% to 2.25% credit card MDR rates metric 2:39
100 times increase in UPI transaction volume since inception metric 4:08
6 million merchants already paying MDR metric 2:39
₹2,000 threshold for UPI transactions attracting MDR guidance 0:24
10 years duration since UPI started timeline 4:08

Chapters

  1. 0:00Welcome for the new UPI MDR
  2. 1:35Investment needs for UPI growth
  3. 2:24Merchant acceptance of MDR
  4. 3:49Reinvestment in payment infrastructure
  5. 5:10Business model unaffected by MDR
  6. 6:19Beneficiary of the MDR framework
  7. 7:43No friction between free and sustainable UPI
  8. 9:11Customer behavior unchanged

Questions asked in this interview

7
  1. 0:00So, from your perspective, will this be the beginning of a sustainable revenue model for the UPI ecosystem?
  2. 2:24In such a scenario, how commercially viable will a revenue-sharing model be for payment apps like yours?
  3. 3:49Do you think the revenue from MDR will create enough incentive to reinvest in payment infrastructure, technology, cybersecurity, and innovation?
  4. 5:10And as you mentioned, with 800 million transactions, will there be a need to focus more on high-value merchant transactions instead of transaction volume?
  5. 6:19Will it be the card networks or the banks?
  6. 7:43Will this framework be able to balance the two objectives of keeping UPI as a free public digital infrastructure and a commercially sustainable payment ecosystem?
  7. 9:11For players like you, will people start using it less or what?
Interviewer 0:00 ↗
Sir, the government has applied a 0.4% MDR on selected merchant UPI transactions above ₹2,000 and said that about 96% of peer-to-peer and peer-to-merchant transactions will remain outside this. So, from your perspective, will this be the beginning of a sustainable revenue model for the UPI ecosystem?
Sameer Nigam 0:24 ↗
It will be the beginning, and a very important beginning, because as you said, 96% of transactions will remain free because most transactions in India are below ₹2,000. For transactions above ₹2,000, NPCI has permitted a 0.4% UPI MDR. So, this charge will apply to larger transactions, and the revenue generated from this will at least cover our costs. For the past six years, when this MDR was free, the entire payment industry was going into significant losses every year. We were telling the government this every year, and the RBI as well. So, we have been waiting for six years because six years ago, there was an MDR on UPI. In over 200 countries worldwide, there are digital payments. India was the only country where there was no MDR on UPI. So, now it has been introduced. Hopefully, the UPI market will continue to grow here as well.
With this revenue, we will be able to invest further to grow UPI. Currently, about 500 million citizens use UPI, and we need to take this number to 800-900 million people in the next seven to eight years, which also requires money. If we want to go international, that requires money too. So, this was very, very important for growing the UPI ecosystem. And as you know, in today's world, there is cyber fraud, fraud, and chargebacks for merchants. The entire burden of that falls on the industry, on fintechs and banks. We have been paying all those costs from our own pockets for so many years. That is why almost all players in the industry were in losses. So, this is very welcome.
Interviewer 2:24 ↗
Sir, the MDR will not be charged to the customer, and merchants will also not be allowed to pass it on to the customer. In such a scenario, how commercially viable will a revenue-sharing model be for payment apps like yours?
Sameer Nigam 2:39 ↗
Sir, in my view, as of today, about 6 million merchants already pay MDR on RuPay, credit cards, Visa cards, and Mastercards. So, many merchants are actually already accustomed to paying MDR. In fact, on credit cards, the MDR is almost 1.5% to 2.25%. This is only 0.4%. So, I am hearing many people today saying that people won't pay. That is not the case. In fact, this is perhaps the cheapest MDR in the world. I have checked, and I haven't found it in any other market yet. 0.4% is either the lowest in the world or at the very bottom of the list. So, the government has kept it very cheap after doing all the work. Merchants will pay, why wouldn't they? There is a benefit. There is an advantage. Customers don't face the problem of exact cash. Everyone comes and pays via the app. They can go cashless. They get data, so merchants can get loans with their data footprint. Many, I mean, many good things happen because of UPI. Payments happen smoothly. It's a good thing.
Interviewer 3:49 ↗
So sir, until now, UPI's growth has largely happened on a zero-MDR model. Do you think the revenue from MDR will create enough incentive to reinvest in payment infrastructure, technology, cybersecurity, and innovation?
Sameer Nigam 4:08 ↗
It absolutely will, sir. In fact, when UPI started 10 years ago, there was an MDR, and the market grew very quickly in the first four years. Then COVID happened, and in 2020, the government made the MDR zero. That helped, and even small businesses came on board. But if you look at the volume today, UPI transactions have increased 100 times. There are approximately 700 to 800 million transactions a day, which is a huge number. So, I feel that now the industry will get revenue. They will be able to invest. They will be able to go into smaller towns. They will be able to digitize more merchants. On the customer side, the apps are finally getting money after six years. So, we will all be able to do more marketing and bring in more use cases. All businessmen in the world want to grow their trade, grow their business. So, payment companies will be different. When the money comes, only then will they grow.
Interviewer 5:10 ↗
Sir, with this decision regarding the MDR, do you see any change in your business model? And as you mentioned, with 800 million transactions, will there be a need to focus more on high-value merchant transactions instead of transaction volume?

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Cite this transcript

APA, MLA, BibTeX
APA

Nigam, S. (2026, September 15). UPI MDR Explained: PhonePe CEO Sameer Nigam on What the New Policy Means for Digital Payments [Interview transcript]. ANI News. CEOInterviews.AI. https://ceointerviews.ai/interview/1352435/

MLA

Sameer Nigam. "UPI MDR Explained: PhonePe CEO Sameer Nigam on What the New Policy Means for Digital Payments." ANI News, 15 Sep. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/1352435/.

BibTeX 
@misc{nigam2026_1352435,
  author       = {Sameer Nigam},
  title        = {UPI MDR Explained: PhonePe CEO Sameer Nigam on What the New Policy Means for Digital Payments},
  howpublished = {Interview transcript, ANI News. CEOInterviews.AI},
  year         = {2026},
  month        = {sep},
  url          = {https://ceointerviews.ai/interview/1352435/},
  note         = {Speaker-attributed transcript with timestamps}
}