UPI MDR changes must balance security and capex burden: CII President
Synopsis
CII President R Mukundan has flagged a core tension in India's UPI MDR debate: scaling a secure digital payments system costs money, and someone has to pay. His remarks, paired with a call to convert BRICS 'intent into outcomes' on trade, reflect industry's impatience with structural gaps — from payment economics to a 14-percentage-point shortfall between BRICS GDP share and trade share.
Key Takeaways
CII President R Mukundan on 17 September 2026 said UPI MDR changes must balance transaction security with rising capital expenditure demands.
Mukundan declined to prescribe a specific MDR formula, saying finance experts are better placed to determine the right approach.
At the BRICS Business Forum , four engagement tracks — from agriculture to high technology — produced a central call to move from 'intent to outcomes' on trade.
BRICS economies account for roughly 40% of global GDP but only about 26% of global trade, highlighting untapped intra-bloc commerce potential.
Mukundan cited India's critical mineral demand and Latin American BRICS mineral supply as a key investment complementarity worth developing.
Confederation of Indian Industry (CII) President R Mukundan on Thursday, 17 September 2026, called for a balanced approach to the recently announced changes in the Merchant Discount Rate (MDR) on UPI transactions, arguing that any revision must simultaneously protect transaction security and address the rising capital expenditure required to sustain the country's digital payments infrastructure.
What Mukundan Said on UPI MDR
Speaking to reporters, Mukundan acknowledged that UPI has dramatically improved the ease of financial transactions across India. He stressed, however, that as the digital payments ecosystem scales, transaction security must not be compromised. Mukundan said he would refrain from commenting in granular detail on the MDR issue, noting that finance specialists are better positioned to determine the appropriate path forward. He expressed confidence that 'a meaningful solution would emerge,' with the central challenge being to meet security objectives while managing the additional capital spending the system now demands.
The MDR debate has resurfaced as transaction volumes on UPI continue to surge, placing greater strain on payment infrastructure operated by banks and fintech players. Industry stakeholders have repeatedly flagged that zero-MDR mandates — introduced in 2020 — have squeezed the financial viability of scaling UPI acceptance, particularly at smaller merchant points.
BRICS Summit: From 'Intent to Outcomes'
Mukundan also shared his assessment of the recently concluded BRICS Summit, describing the gathering as one that brought member countries together with 'greater warmth and alignment.' He noted that the bloc has expanded considerably beyond its founding membership and that the BRICS Business Forum saw positive engagement across four tracks — spanning agriculture to high technology.
According to Mukundan, the central message from the business forum was the urgent need to move from 'intent to outcomes,' particularly in trade and investment. He pointed out that BRICS economies collectively account for approximately 40 per cent of global GDP yet represent only around 26 per cent of global trade — a gap he said signals significant untapped potential for intra-BRICS commerce.
Reducing Barriers to Intra-BRICS Trade
Mukundan outlined several priorities for deepening trade ties: reducing non-tariff barriers, aligning quality standards, standardising approval processes, and improving the cross-border movement of goods. He also highlighted investment opportunities arising from the complementarity between India's demand for critical minerals and the mineral resources available in Latin American BRICS economies.
He said such investment flows need to be supported by adequate financing, improved market access, and government-to-government arrangements that can offer greater protection for cross-border capital. Notably, this call for structured investment frameworks comes as India deepens its engagements with newer BRICS members across Africa and Latin America.
What Comes Next
The MDR debate is expected to intensify as the Reserve Bank of India (RBI) and the Centre weigh the financial sustainability of UPI's zero-cost model against its public-good mandate. Industry bodies including CII are likely to push for a consultative framework that brings together banks, fintech firms, and regulators before any final MDR structure is formalised.
Point of View
The government, or consumers. On BRICS, the 14-percentage-point gap between GDP share and trade share is the headline number that has persisted through multiple summits — the shift from communiqués to binding trade facilitation commitments is long overdue, and business forums alone will not close it.
NationPress
17 Sept 2026
Frequently Asked Questions
What are the recent UPI MDR changes that CII is responding to?
The Merchant Discount Rate on UPI transactions has been under policy review, with discussions around whether a partial MDR should be reintroduced to fund the rising infrastructure and security costs of the payments system. CII President R Mukundan said on 17 September 2026 that any changes must balance security imperatives with the capital expenditure burden on banks and payment operators.
Why does UPI MDR matter to merchants and banks?
Since the zero-MDR mandate was introduced in 2020, banks and payment service providers have borne infrastructure costs without a fee-based revenue stream from UPI transactions. As transaction volumes surge, stakeholders argue this model is financially unsustainable at scale, particularly for expanding merchant acceptance in smaller towns and rural areas.
What did R Mukundan say about the BRICS Summit?
Mukundan said the BRICS Summit generated greater warmth and alignment among member countries, with the Business Forum engaging positively across four tracks from agriculture to high technology. He highlighted a key message: BRICS nations must move from 'intent to outcomes,' especially on trade and investment, given that the bloc accounts for 40% of global GDP but only about 26% of global trade.
How can BRICS countries increase intra-bloc trade?
According to Mukundan, reducing non-tariff barriers, aligning quality standards, standardising approval processes, and improving cross-border movement of goods are critical steps. He also identified greater cross-border investment — particularly between India's critical mineral demand and Latin American BRICS mineral resources — as a concrete area for action backed by government-to-government arrangements.
Who is R Mukundan and why do his views on UPI MDR matter?
R Mukundan is the President of the Confederation of Indian Industry (CII), India's premier industry body representing businesses across sectors. His views carry weight in policy circles as CII regularly engages with the government and the RBI on regulatory frameworks, including the future structure of digital payments.
