UPI MDR Charges: PhonePe CEO Sameer Nigam Speaks on The Policy and Its Impact on Digital Payment
UPI MDR Charges: PhonePe CEO Sameer Nigam shared his views on the proposed changes surrounding Merchant Discount Rate (MDR). The debate comes as Indian government imposed MDR charges on UPI payments, without impacting the customer.
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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 UPI transactions above ₹2,000, calling it a crucial first step toward a sustainable revenue model. He noted that 96% of transactions remain free, and the charge will help cover industry costs after six years of losses. Nigam argued that merchants will pay the low MDR, citing that 60 lakh merchants already pay higher rates on credit cards. He dismissed concerns about business model shifts, insisting PhonePe will continue serving all transaction sizes. The biggest financial beneficiaries will be spread across the ecosystem's five to six players, not any single entity, and ultimately customers will benefit as UPI remains free for them. Nigam drew parallels to Aadhaar, where businesses pay for services while citizens do not, and confidently predicted that customer usage will not decline.
Key takeaways
0.4% MDR on UPI transactions above ₹2,000 is the cheapest in the world and will cover industry costs after six years of losses.
UPI transactions have grown over 100 times since 2016, with 70-80 crore daily transactions, enabling industry investment.
PhonePe will not shift focus to high-value transactions; small transactions remain important for data and loan facilities.
The MDR revenue will be shared among five to six ecosystem players, including banks, apps, and NPCI, not concentrated on one.
Customers will not stop using UPI because merchants pay the charge, and customer usage is unaffected.
0:00So, from your perspective, will this be the beginning of a sustainable revenue model for the UPI ecosystem?
2:24In such a scenario, how commercially viable will a revenue-sharing model be for payment apps like yours?
3:49Do you think the revenue from MDR will create enough incentive to reinvest in payment infrastructure, technology, cybersecurity, and innovation?
5:10And will there be a need to focus more on high-value merchant transactions rather than transaction volume, as you mentioned that 80 crore transactions happen?
6:19Will it be the card networks or the banks that will benefit from it?
7:43Will this framework be able to strike a balance between UPI as a free public digital infrastructure and a commercially sustainable payment ecosystem — between these two objectives?
9:11And sir, will there be any difference in the customer base for players like you — will people start using it less, or what?
Sir, the government has imposed a 0.4% MDR on selected merchant UPI transactions above ₹2,000, and has said that about 96% of P2P2M transactions will remain outside this. So, from your perspective, will this be the beginning of a sustainable revenue model for the UPI ecosystem?
Yes, it will be the beginning, and a very important one, because as you said, 96% of transactions will remain free, since most transactions in India are below ₹2,000. On transactions above ₹2,000, NPCI has permitted a 0.4% MDR on UPI. So this charge will apply to the larger transactions, and the revenue the industry earns from it will at least cover our costs. For the past six years, while this MDR was free, the entire payment industry was running at a significant loss every year. We were telling the government this every year, and we were telling the RBI as well. So for six years we have been waiting, because before those six years there was an MDR on UPI. In more than 200 countries around the world there are digital payments. India was the only country where there was no MDR on UPI. So now it has come. Hopefully, the UPI market will also grow here. With this revenue, we will be able to go and invest so that we can grow UPI further. Right now, roughly 50 crore citizens use UPI. We need to take this number forward to 80–90 crore people in the next seven to eight years, and that will require money. If we want to go international, that will require money too. So to grow the UPI ecosystem, this was very, very important. And you also know that in today's times there is cyber fraud, fraud, chargebacks on merchants. The entire burden of that falls on the fintechs and banks. We have been paying all that money out of our own pockets for so many years. That is why almost all the players in the industry were in losses. So this is very welcome.
Sir, the MDR will not be charged to the customer, and merchants will also not be permitted 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?
Sir, in my view, today around 60 lakh merchants already pay MDR on rupee credit cards, Visa cards, Mastercard, and everything. So many merchants are actually already used to paying MDR. In fact, on credit cards and so on, almost 1.5% to 2.25% MDR is charged. This is only 0.4%. So I am hearing a lot of people saying today that people will not pay. That is not the case. In fact, this is probably the cheapest MDR in the world. I checked, and I haven't found it in any other market yet. 0.4% is not the lowest in the world, but it would definitely be at the very bottom of the list. So even then, the government has kept it very cheap after doing everything. So merchants will pay — why wouldn't they? There are advantages. There are benefits. The customer does not have the problem of exact cash. Everyone comes and pays through the app. They can go cashless. There is data, so merchants can get loans along with their data footprint. Many, I mean, many good things happen because of UPI. Payments happen. It is a good thing.
So sir, the growth of UPI so far 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?
Absolutely, it will, sir. In fact, when UPI started 10 years ago, there was an MDR, and the market grew very fast in the first four years too. Then COVID happened, and during COVID, in 2020, the government made MDR zero. That did help — even small businesses came in with it. But if you look at the volume today, UPI transactions have grown more than 100 times. In a day, there are roughly 70 to 80 crore transactions — a very large number of transactions. So I feel that now the industry will get revenue. They will be able to invest. They will be able to go into smaller cities. They will be able to digitize more merchants. On the customer side too, the TPS is finally getting money after six years. So all of us will be able to do more marketing and bring in more use cases. All businessmen in the world want the same thing, right — to grow their trade, to grow their business. Payment companies are different. Only when the money comes will they grow.
Sir, with this decision, now that MDR is being discussed, will there be any change in your business model? And will there be a need to focus more on high-value merchant transactions rather than transaction volume, as you mentioned that 80 crore transactions happen?
7 more exchanges in this transcript
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Nigam, S. (2026, September 15). UPI MDR Charges: PhonePe CEO Sameer Nigam Speaks on The Policy and Its Impact on Digital Payment [Interview transcript]. IndiaTV News English. CEOInterviews.AI. https://ceointerviews.ai/interview/2961101/
MLA
Sameer Nigam. "UPI MDR Charges: PhonePe CEO Sameer Nigam Speaks on The Policy and Its Impact on Digital Payment." IndiaTV News English, 15 Sep. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/2961101/.
BibTeX
@misc{nigam2026_2961101,
author = {Sameer Nigam},
title = {UPI MDR Charges: PhonePe CEO Sameer Nigam Speaks on The Policy and Its Impact on Digital Payment},
howpublished = {Interview transcript, IndiaTV News English. CEOInterviews.AI},
year = {2026},
month = {sep},
url = {https://ceointerviews.ai/interview/2961101/},
note = {Speaker-attributed transcript with timestamps}
}
