Growth in India’s Unified Payments Interface slowed in the first four months of FY27, but transaction values and user base continue to expand, prompting renewed discussions on merchant discount rates and fee policies.
Growth in India’s Unified Payments Interface eased in the first four months of FY27, even as the country’s flagship digital payments rail continued to move enormous sums. Data cited from the National Payments Corporation of India show UPI handled about 92 billion transactions between April and July 2026, up 23.5% from a year earlier, a slower pace than the 33.5% recorded in the same period of FY26.
The deceleration follows a run of very strong expansion. Business Standard reported that UPI transaction volume rose about 41% in FY25 and nearly 30% in FY26, underscoring how the platform’s early hypergrowth is giving way to a more mature phase. Even so, the system’s scale keeps widening: IBEF said UPI had 55.49 crore users by June 2026 and processed 24,161.69 crore transactions worth ₹314.23 lakh crore in FY26.
The value of transactions tells a different story. While the number of payments has grown more slowly, the amount moving through the network has continued to rise at a healthy pace. Moneycontrol reported that UPI transactions were worth more than ₹308 lakh crore in FY26, up 18.5% from the previous year, with March 2026 alone setting a record at ₹29.53 lakh crore. That suggests users are relying on UPI for increasingly larger purchases, not just small peer-to-peer transfers.
The moderation in growth has also renewed debate over merchant discount rate, or MDR, the fee paid by merchants and payment companies for processing card and digital payments. UPI has operated under a zero-MDR framework since 2020, a policy designed to accelerate adoption, but banks and fintech firms argue it leaves too little revenue to invest in incentives and infrastructure. Reports have also pointed to discussion of a possible MDR of about 0.25% to 0.30% on some high-value merchant transactions, although supporters of free UPI payments say zero fees remain central to its reach among small businesses and first-time users.
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