Is UPI’s MDR Rule Rewarding Failure Over Innovation? — nonsensical policies, digital payment monopolies, revenue model innovation
UPI transaction fees impact, Digital payment innovation challenges, Mobile payment market competition
Absolute poppycock. MDR on UPI will not only burden users, it will also mean the those who blindly captured market share without a revenue model (GPay, PhonePay) will have oligopolistic power while those who innovated (Paytm) will get punished for developing new revenue models. pic.twitter.com/35cd3Np7VJ
— Diva Jain (@DivaJain2) August 21, 2025
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Absolute poppycock
Diva Jain’s tweet succinctly captures the frustrations surrounding the Merchant Discount Rate (MDR) on the Unified Payments Interface (UPI). Many believe that implementing MDR could significantly burden users. This perspective raises an important question: is this change truly beneficial for consumers, or does it favor certain players in the digital payments landscape?
MDR on UPI will not only burden users
The introduction of MDR could lead to increased transaction costs for users, potentially driving them away from using UPI altogether. It’s essential to consider that while users might be looking for seamless transactions, this new fee could hinder their experience. The concern is that users may end up paying more for the convenience that UPI initially promised without any substantial benefits.
It will also mean those who blindly captured market share without a revenue model
Jain points out a critical concern: platforms like GPay and PhonePe, which have rapidly gained market share without a clear revenue model, could gain even more power. These companies might continue to dominate the market, leading to oligopolistic behavior that stifles competition. This scenario could be detrimental to innovation, making it harder for new players to enter the market.
While those who innovated (Paytm) will get punished for developing new revenue models
Interestingly, established players like Paytm, who have worked hard to create sustainable revenue streams, may find themselves at a disadvantage. Instead of being rewarded for innovation, they could face challenges as the market dynamics shift. This situation raises broader questions about the health of the digital payments ecosystem and the implications for users and businesses alike.
In summary, the discussion around MDR on UPI is complex and highlights the need for careful consideration of how such changes will impact all stakeholders involved.