PayU India CEO Proposes Dynamic UPI Fees Tied to Merchant Size, Sparks National Debate

In a fresh twist to India's dynamic digital payments landscape, Anirban Mukherjee, the CEO of PayU India, has put forth a compelling argument: UPI fees should be linked to a merchant's size and sector, rather than the outdated distinction of online versus offline transactions. His proposal, made amidst a fervent national discussion, suggests that costs like physical distribution for offline stores and robust risk management for online platforms broadly balance out, urging for a simpler, more equitable fee structure for the Unified Payments Interface. This push for a refined fee model arrives as the Indian government recently passed the Taxation and Other Laws (Amendment) Bill, 2026, an enabling provision that could pave the way for a Merchant Discount Rate (MDR) on select UPI transactions, moving away from the long-standing zero-MDR policy. While authorities have clarified that individual users and most small-value merchant transactions will remain free, with any MDR being nominal and threshold-based, industry players like PayU argue that a sustainable revenue stream is crucial to fund the colossal investments needed for UPI cybersecurity, fraud prevention, and infrastructure upgrades. The ball is now in the court of the 'UPI and Services Steering Committee', chaired by the National Payments Corporation of India (NPCI), which will ultimately determine the specifics of any new MDR framework. As India's digital payments market is projected to skyrocket to $10 trillion by 2026, with UPI already handling nearly half the world's real-time transactions, the debate around how to fairly monetize this public utility without hindering its widespread adoption remains a critical balancing act for both policymakers and businesses.