The National Payments Corporation of India (NPCI) reported that UPI processed approximately 145 billion transactions in the first half of the current financial year, marking a 27% increase from the 114 billion transactions recorded during the same period last year, while the total value of these transactions grew by 20% to Rs 177 lakh crore from Rs 148 lakh crore a year earlier, even though UPI experienced a slight month-on-month decline in both transaction volume and value in September, recording 24.07 billion transactions down 1.7% from 24.5 billion in August and a 1.5% decrease in total value to Rs 29.37 lakh crore from Rs 29.82 lakh crore in August, which came despite September having one fewer day than August, as on a daily average basis, UPI transactions were actually higher in September with the system processing around 802 million transactions per day compared with 791 million per day in August. This September data arrives ahead of the new merchant discount rate (MDR) framework for certain high-value UPI transactions taking effect from October 15, under which merchants will be charged an MDR of 0.4% on UPI transactions above Rs 2,000 while person-to-person transactions remain completely free, with MDR being the fee paid by merchants to payment service providers that will be divided among the ecosystem so that customers’ banks receive 40%, payment gateways 30%, UPI apps 20%, and the sponsoring bank of the UPI app 10%. This fee, paid exclusively by merchants and capped at Rs 300 for transactions worth Rs 75,000 or more, will not apply to person-to-person payments or most regular merchant transactions, while a separate fee structure applies to essential services with UPI transactions above Rs 2,000 for railways, telecom, fuel, and insurance attracting a flat fee of Rs 5 per transaction, and capital market payments including mutual funds and stockbroking carrying an MDR of 0.02% with a maximum charge of Rs 300, whereas small merchants collecting up to Rs 1 lakh a month through UPI QR codes are exempt from the new charge, covering around 96% of all merchant transactions. NPCI, set up as an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) to operate as the umbrella organization for India’s retail payment and settlement systems, runs UPI for real-time payments, and since its launch on August 25, 2016, UPI has recorded a sharp increase from processing transactions worth Rs 0.07 lakh crore in FY17 to around Rs 314 lakh crore by FY26, marking a more than 4,000-fold rise over the decade.
UPI Transaction Value Surges 20% to Rs 177 Lakh Crore in H1 FY27 Ahead of MDR Policy Overhaul
