UPI Transactions Dip 2% MoM To 24.07 Bn In September

Amid ongoing debate over the future of UPI post the introduction of MDR, UPI transaction volumes for the month of September fell marginally, NPCI data reveals.

While volume of transactions processed  declined nearly 1.8% month-on-month (MoM) to 24.07 Bn in September from a record 24.51 Bn in August, the value of these transactions also fell 1.5% to ₹29.37 Lakh Cr from ₹29.82 Lakh Cr.

The volume of monthly transactions for the month of September increased 23% YoY while transaction value grew 18%. This is slightly higher than the 22% YoY jump recorded in the month of August. 

UPI processed an average of 802 Mn transactions per day in September, up from 791 Mn in August. The average daily transaction value also increased to ₹97,913 Cr from ₹96,205 Cr during the previous month.

UPI’s Monetisation Question

Headlines around UPI over the past month were centred around the Centre’s notification of the new UPI Merchant Discount Rate (MDR) framework, which is to be implemented from October 15. 

Under the framework, eligible person-to-merchant (P2M) transactions above ₹2,000 will attract an MDR of 0.4%, capped at ₹300 for transactions of ₹75,000 and above. Person-to-person payments will continue to remain free of MDR. 

The proposed charges have sparked concerns among merchants and retailers. Retailer groups have warned that the MDR could discourage businesses from accepting UPI, particularly during the festive season when transaction values are often higher than ₹2,000.

Earlier this week, The All India Mobile Retailers Association (AIMRA) and the All India Consumer Products Distributors Federation (AICPDF) also announced a “No UPI Day” protest for October 2. 

However, the protest was called off after representatives of 20 trade associations met finance minister Nirmala Sitharaman to raise concerns regarding MDR. 

On the other hand, businesses across the UPI ecosystem, including banks, payment companies and TPAPs, have welcomed the move, as the framework is expected to open up a new revenue stream for players in the payments ecosystem.

Under the standard 0.4% MDR structure, the merchant pays the acquiring bank, which passes 0.28% to the issuing bank as an interchange. Of the remaining 0.12%, the issuing bank pays 0.08% to the payer-side payment service provider, which then shares it with the UPI app provider.

This has long been a demand of the players operating in the UPI ecosystem as it brings more clarity on the sustainability of their business models. For instance, Inc42 learnt that UPI leader, PhonePe, is mulling the revival of its IPO plans post clarity on UPI MDR.

The fintech startup, which handles almost 45% share of UPI merchant payments, will now be targeting a public listing between February-March 2027. It will look to file its updated IPO papers by the end of this year, seeking a valuation of $10 Bn.

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