Newsletter
In the first four months of FY27, UPI transaction volumes grew 23.5%, compared with 33.5% a year earlier. Between April and July, UPI processed 92 billion transactions, up from 74.5 billion in the same period last year.
This slowdown has been building for a while. UPI’s volume growth fell to nearly 30% in FY26, from 41% in FY25.
That brings up a bigger question: should UPI remain free?
Since 2020, UPI has had zero MDR, meaning merchants don't pay a fee to banks or payment companies for processing UPI payments. Payment companies say bringing back a small fee could help them invest in customer acquisition and merchant expansion. Supporters of zero MDR, however, argue that keeping UPI free helps drive wider adoption.
Now, that could change. The Taxation and Other Laws (Amendment) Bill, 2026, passed by the Lok Sabha on August 6, could pave the way for MDR on UPI. The government is reportedly considering a 0.25%-0.30% fee on high-value transactions by large merchants.
Interestingly, while the number of UPI transactions is growing more slowly, the value of those transactions is picking up. Value growth rose to 20% in the first four months of FY27, from 18.5% in FY26.
And UPI is still the dominant player: it accounts for around 88% of India's digital transactions, processing 23+ billion transactions worth nearly ₹30 lakh crore every month.
