Banks have started charging for UPI. This is not surprising. Making MDR zero has second degree effects of mis-selling, systemic risk and stifling entrepreneurship

Banks have resorted to hidden charges to pay for the infrastructure and fraud costs. Smaller Fintechs need to do the same to survive and banks need an upper cap or there could be a run on their tech platforms. Consumer at the same time feel cheated and loose trust

Some Fintechs have resorted to holding merchant payments for 15 days and earn float income interest as revenue streams. A collapse of such weak fintechs and payment cos could be a systemic risk.

Lending then becomes the only source of revenue and this leads to massive mis-selling. Lending at 60% APR to small street vendors and merchants is like burdening the weakest section. Also kills entrepreneurship in the small markets of India

No merchant has ever refused a 0.3% charge for payment convenience. Similarly, no consumer would complain. MDR shouldn't stay at zero