GetePay, a Rajasthan-based fintech firm, has raised concerns about the sustainability of India's current UPI model. As UPI continues to replace traditional credit and debit cards, the firm suggests that the industry may need to move away from the Zero-MDR model. MDR, or Merchant Discount Rate, is the fee a merchant pays to the bank for processing a digital payment. Currently, UPI does not charge this fee to merchants, which makes it free but expensive for banks and payment firms to maintain.

The scale of UPI growth is massive, with the platform processing 24,162 crore transactions worth ₹314 lakh crore in the 2026 financial year. This represents a 30 percent growth in volume and a 21 percent growth in value compared to the previous year. With over 55 crore users, UPI now accounts for nearly 85 percent of all digital payment volumes in India. However, this high volume creates pressure on the technology and security systems managed by banks and payment aggregators.

Praveen Sharma, the founder of GetePay, argues that a small fee is necessary to fund investments in cybersecurity and fraud prevention. He suggests that even a tiny charge, known as basis points, would be better than nothing. For example, a 5-basis point fee (0.05%) on a ₹10,000 transaction would be just ₹5. If the industry processed ₹1 lakh crore in eligible transactions at this rate, it would generate ₹50 crore to help cover costs.

Currently, banks and payment companies incur heavy costs for merchant acquisition (signing up new shops), technology upgrades, and compliance with government rules. Since UPI has zero MDR, these companies are not earning revenue from the transaction flow, even as customers stop using cards that do generate fees. This shift is hurting the profitability of the payment departments within Indian banks.

For bank officers and aspirants, this is a critical trend to watch. If the government or RBI allows a nominal MDR, it could lead to a new revenue stream for banks. It would also help in managing the high costs of maintaining servers and security for the millions of UPI transactions happening every hour. The extra funds would ensure that the digital payment rail remains fast and safe for all users.

What happens next depends on policy changes from the RBI and the government. While the goal is to keep UPI affordable for everyone, the infrastructure needs money to survive. If a fee structure is introduced, the revenue would likely be split between the banks, payment aggregators, and the NPCI (National Payments Corporation of India). This debate will decide how India's payment ecosystem grows in the coming years.