Former Infosys CFO Mohandas Pai has said the introduction of Merchant Discount Rate (MDR) on certain high-value UPI transactions is unlikely to affect most users, with around 96% of transactions expected to remain outside the new charge framework.

Under the revised system, a 0.4% MDR will apply to eligible Person-to-Merchant (P2M) UPI transactions above ₹2,000 from October 15, 2026. Person-to-person (P2P) UPI payments will continue to remain free.

Pai highlighted the rapid expansion of UPI and the investment needed to maintain the infrastructure supporting India's real-time digital payment network. He said transaction volumes are expected to increase substantially, making continued upgrades to technology and payment systems necessary.

The MDR framework is intended to create a revenue stream within the UPI ecosystem while retaining zero charges for P2P transactions and eligible low-value merchant payments.

The impact will therefore vary depending on the type and value of a transaction. Everyday users making P2P payments and most smaller UPI purchases are expected to remain unaffected, while specified higher-value merchant transactions will attract MDR.

The changes have prompted discussion among consumers, merchants and payment companies about the future cost structure of India's rapidly expanding digital payments ecosystem.