Proponents of reintroducing a merchant discount rate argue that the current zero-fee model, while successful in driving initial adoption, is no longer sufficient to support the massive scale of India's digital economy. As UPI processes tens of billions of transactions, the costs associated with maintaining high-level security, server infrastructure, and constant technological upgrades have grown significantly. Without a sustainable revenue stream, banks and payment service providers face a structural funding gap that could eventually limit the quality and reliability of the services provided to millions of users.
By targeting only large merchants, the proposed policy strikes a necessary balance between fiscal responsibility and social inclusion. Large corporations that benefit from the efficiency and reach of the UPI network are well-positioned to contribute to the maintenance of the very infrastructure that facilitates their business. This approach ensures that the burden of funding does not fall on small shopkeepers or individual citizens, who rely on UPI for their daily financial needs. A modest fee, as suggested by industry experts, would provide the capital required to innovate and expand the platform's capabilities.
Furthermore, comparing India's model to other global real-time payment systems reveals that a fee-based structure is standard practice for ensuring long-term viability. Countries with similar digital payment frameworks often utilize merchant charges to keep the system robust and secure. By enabling the government to set a graded MDR, the policy allows for a flexible, data-driven approach that can be adjusted based on market conditions. This shift is not about discouraging digital payments but about maturing the ecosystem so it can continue to serve as the backbone of India's financial future for decades to come.