Third-party UPI apps are raising concerns that the new UPI Merchant Discount Rate (MDR) framework could make bill payments financially unviable for them. The issue has emerged after the National Payments Corporation of India (NPCI) banned UPI apps from charging customers a separate platform fee for bill payments.
Apps Currently Charge ₹3-5 Platform Fee
UPI apps have traditionally charged users a ₹3-5 platform fee on certain bill payments, including electricity, water, gas and credit card bills processed through Bharat Connect, formerly known as the Bharat Bill Payment System.
Under the new framework coming into effect on October 15, UPI apps will no longer be allowed to impose such platform fees or any other charges on customers for UPI transactions.
This means apps will lose an existing source of revenue from bill payments.
₹5 MDR for Larger Bill Payments
The new MDR structure provides a flat ₹5 MDR for eligible bill payments above ₹2,000.
However, UPI app providers will receive only around ₹1 from this ₹5 MDR, with the remaining amount distributed among other participants in the payments ecosystem.
Payment apps argue that this amount may not be enough to cover the commissions they have to pay to Bharat Connect along with their own processing and opera
