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Indian Bank develops UPI fee safeguards, weighs partial merchant waivers
Our read
Indian Bank's safeguards are likely to constrain consumer surcharges; any partial waivers could turn merchant cost relief into an acquiring advantage.
For operators
Monitor Indian Bank’s consumer-fee safeguards to protect checkout trust, but do not budget for lower UPI acceptance costs until partial merchant MDR waivers are confirmed.
Watch
Published merchant terms restricting consumer fee pass-through
The report,
Indian Bank is developing safeguards to stop the 0.4 per cent UPI MDR being passed to consumers. It is also considering partial MDR waivers for merchants where it acts as the acquiring bank.
- Customers' banks share of MDR40 per cent
- Payment gateways share of MDR30 per cent
- UPI app share of MDR20 per cent
- UPI app sponsoring bank share of MDR10 per cent
Channel facts
From the report. Source details below
| Indian Bank expected MDR income: | around ₹100 crore |
|---|---|
| Indian Bank April-September 2026 eligible P2M volume: | around 12.1 crore |
| Indian Bank April-September 2026 eligible P2M value: | roughly ₹1.05 lakh crore |
| Customers’ banks share of MDR: | 40 per cent |
| Payment gateways share of MDR: | 30 per cent |
| UPI app share of MDR: | 20 per cent |
| UPI app sponsoring bank share: | 10 per cent |
What it means for online and offline
Assess Indian Bank as a potential acquiring partner, focusing diligence on waiver eligibility, consumer-fee controls and rollout timing.
Signals to track
- A partial MDR waiver announcement specifying eligibility
- Consumer surcharge complaints at Indian Bank-acquired merchants
- Changes in Indian Bank's merchant-acquiring sign-ups or UPI volumes
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Indian Bank is likely to translate its consumer-fee safeguards into merchant acceptance terms or controls that restrict MDR pass-through.
- Indian Bank may make any partial MDR waivers conditional on merchant eligibility, limiting the revenue sacrifice rather than offering blanket relief.
- Indian Bank's merchant customers may shift more UPI acceptance toward the bank if confirmed waivers make its acquiring service cheaper than alternatives.
The counter-case
The case against this reading — not reported by the source.
This is a tentative, bank-specific proposal, not a confirmed reduction in merchant costs. Any waiver would cover only eligible merchants acquired by Indian Bank, while safeguards against explicit consumer surcharges may not prevent indirect pass-through through prices. The omni-channel significance is weak without evidence of rollout, merchant adoption or material savings.