# Government may end UPI subsidies as MDR revenue grows

> India's government could stop subsidizing low-value UPI transactions after banks earn revenue from larger payments.
- Title: Government may end UPI subsidies as MDR revenue grows
- Summary: India's government could stop subsidizing low-value UPI transactions after banks earn revenue from larger payments. UPI subsidies may end as merchant…
- Keywords: upi, mdr, government subsidies, banking, digital payments, rupee, nirmala sitharaman, Government, may, end, subsidies, revenue
- Source: The Economic Times — https://economictimes.indiatimes.com/industry/banking/finance/banking/government-may-do-away-with-upi-subsidies-as-mdr-revenue-kicks-in/articleshow/134397252.cms
- Author: Saloni Shukla
- Published: 2026-09-21T19:26:00+00:00
- Read time: 1 min
- Topics: upi, mdr, government subsidies, banking, digital payments, rupee, nirmala sitharaman
## UPI subsidies cut
The government may stop subsidizing low-value UPI transactions after banks start earning revenue from larger payments.

> The idea behind introducing MDR on larger value UPI payments was to move the ecosystem away from taxpayer funded subsidies.
## No new subsidies since April 2025
No fresh subsidy payments have been made for transactions since April 2025, as MDR revenue covers the cost.
## Subsidy drop in FY25
UPI incentive disbursements fell from ₹3,631 crore in FY24 to ₹1,046 crore in FY25.
## MDR revenue plan
The government budgeted ₹2,000 crore for UPI incentives in FY27 but no new subsidies have been paid since April 2025.
## Why MDR introduced
MDR was introduced to reduce taxpayer subsidies and encourage small merchants to accept digital payments.
## Key takeaway

UPI subsidies may end as merchant discount rates generate income from high-value transactions.