UPI Crosses 700 Million Daily Transactions in India: Will MDR Make a Comeback?

India’s homegrown digital payments platform, the Unified Payments Interface (UPI), has reached yet another milestone. On August 2, 2025, the number of daily UPI transactions crossed 700 million, hitting 707 million, as per the latest data released by the National Payments Corporation of India (NPCI).

This achievement underscores the rapid adoption and deep penetration of digital payment systems across the country, driven by increased internet access, smartphone usage, and a shift toward cashless transactions.
 

Doubling in Two Years

Just two years ago, in August 2023, UPI processed around 350 million transactions per day. By August 2024, this number had already jumped to 500 million. Now, in August 2025, it has touched 707 million—effectively doubling in just 24 months.

The average daily transaction volume currently stands at around 650 million, with the platform handling over 19.5 billion transactions worth ₹25 lakh crore in the past month alone. This translates to a daily value of about ₹83,000 crore.

UPI now contributes nearly 85% of all digital transactions in India, and impressively, it accounts for nearly 50% of all real-time digital payments globally—outpacing even global giants like Visa.

 

The Government's Target: 1 Billion Daily Transactions

In line with its vision for a cashless economy, the Government of India has set a bold target of achieving 100 crore (1 billion) UPI transactions per day. Given the current growth trajectory of 5–7% per month and annual growth of around 40%, fintech experts believe that India is on track to meet this target within the next year.

However, reaching this goal may not be as simple as maintaining growth. The underlying payment infrastructure is under strain, and the financial model sustaining UPI is now under scrutiny.

 

The MDR Debate: Financial Sustainability of UPI
 

Despite the growth in usage, UPI remains free for end-users, and merchants are also not charged any fee for accepting UPI payments—thanks to a waiver on the Merchant Discount Rate (MDR) that the government introduced in December 2019.

MDR, typically ranging between 1% and 3% of the transaction value, is a fee charged to merchants by banks and payment service providers for processing digital payments. It was waived for RuPay debit cards and UPI transactions to promote digital adoption. While this helped scale UPI, it created a sustainability issue for the stakeholders powering the ecosystem—banks, fintech firms, and technology providers.

In FY24, the government allocated ₹4,500 crore to subsidize UPI-related infrastructure costs. However, in FY25, this subsidy has been slashed to ₹1,500 crore—raising questions about how long UPI can remain free.
 

RBI Voices Support for MDR Reintroduction

In a significant development, RBI Governor Sanjay Malhotra recently acknowledged the issue, stating that the UPI ecosystem needs to be financially sustainable. He noted, “Costs will have to be paid. Someone will have to bear the cost.”

The Reserve Bank of India has echoed the demands of fintech associations and payment companies, who are urging the government to reintroduce a marginal MDR, especially for large merchants and high-value transactions. They argue that such a move would help finance the infrastructure needed to process billions of transactions daily, without overburdening small businesses or end-users.
 

What Lies Ahead?

At present, there is no official indication from the government on whether MDR will be reinstated, or if other cost-sharing mechanisms will be introduced. However, industry insiders believe that some form of cost recovery is inevitable, particularly if the government continues to scale down subsidies.

The debate comes at a critical juncture for UPI. As the platform breaks records and gains global recognition, its future hinges on how well the financial ecosystem can support this scale without compromising on speed, security, or accessibility.
 

Conclusion

India’s UPI story is a powerful example of how technology, policy, and innovation can transform an economy. But for the next chapter to succeed, stakeholders must address the economic sustainability of digital payments. Whether through MDR or another model, one thing is clear: a billion daily UPI transactions won’t come for free.