The UPI Monetization
Katrela Ventures Daily Update · Investment, M&A and Business Innovation Digest · 17 September 2026
Key takeaways
NPCI introduced a 0.4% merchant discount rate on person-to-merchant UPI payments above ₹2,000, effective 15 October 2026.
The fee is capped at ₹300 per transaction, and more than 95% of P2M volume stays exempt.
PB Fintech is acquiring the remaining 20% of MyLoancare; DheyaTech raised ₹43 crore in a Pre-Series A led by Avaana Capital.
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📩 #Read the full update below.
01. TOP STORIES
PB Fintech to Acquire Remaining 20% Stake in MyLoancare: Policybazaar and Paisabazaar parent PB Fintech has received in-principle approval to buy out the remaining 20% stake in its subsidiary MyLoancare Ventures for up to Rs. 5 crore, making it a wholly owned subsidiary by March 31, 2027. Alongside this, the board cleared capital infusions of Rs. 10 crore into PB Wheels and Rs. 1 crore into PB Financial Account Aggregator.Peak XV Trims Groww Stake for Rs. 1,756 Cr: Peak XV Partners has sold a 1.47% stake in Groww parent Billionbrains Garage Ventures by offloading 9.17 crore shares at Rs. 191.49 per share via a bulk deal worth Rs. 1,756 crore. This follows major stake sales by early backers Y Combinator and Ribbit Capital in August, pushing total secondary exits past Rs. 5,400 crs. since August.
02. QUICK TAKES
UPI Just Got Its First Real Merchant Fee - But 95% of Transactions Remain Untouched
Ecosystem Scale: New MDR Rate: 0.4% (P2M above ₹2,000) | Effective Date: October 15, 2026 | Share of P2M Volume Exempted: 95%+ | Fee Cap: ₹300 per transaction
NPCI has introduced a 0.4% Merchant Discount Rate on select Person-to-Merchant UPI transactions exceeding ₹2,000, effective October 15, 2026 - the first meaningful monetization mechanism UPI has carried since launch. Transactions up to ₹2,000, representing over 95% of total P2M volume, remain completely free, meaning the vast majority of daily UPI usage (chai stalls, groceries, small retail) is untouched. Consumers pay nothing either way - the charge sits strictly with merchants receiving higher-value payments, and apps are explicitly barred from passing it on as a platform fee.
The fee structure is tiered and capped, not flat: a ₹3,000 payment attracts ₹12 in MDR, a ₹50,000 transaction attracts ₹200, and anything above ₹75,000 is capped at ₹300 regardless of size - protecting large-ticket merchants from proportional fee explosion. Small merchants processing up to ₹1 lakh per month under the P2PM framework are fully exempt, insulating kirana-scale businesses from the change entirely. Select high-volume categories - railways, telecom, insurance, and fuel - get a flat ₹5 fee per transaction above ₹2,000 instead of the percentage-based rate, reflecting their razor-thin margins on large transaction volumes.
NPCI's stated rationale is structural sustainability, not revenue extraction: UPI now processes billions of transactions monthly, and continued investment in cybersecurity, fraud prevention, server capacity, and infrastructure requires a revenue mechanism within the payment ecosystem itself, rather than indefinite dependence on government incentive funding. This directly strengthens UPI's position as India's flagship Digital Public Infrastructure (DPI) asset - a self-sustaining system is a stronger export template (as India pushes UPI-linked corridors globally) than one perpetually subsidized by the exchequer.
Katrela's Take
➢ This is NPCI drawing a careful line - monetize just enough to fund UPI's infrastructure without touching the free, ubiquitous daily-use case that made UPI a genuine cash replacement. The 95% exemption threshold is the real signal: this isn't a pivot to a fee-based model, it's a targeted tax on high-value, business-to-business-adjacent payments (large retail, B2B settlements) where a 0.4% fee is invisible against transaction size. The founders and platforms to watch aren't consumer UPI apps - it's merchant-side fintech infrastructure (reconciliation, fee-optimization, working-capital tools) built for businesses now absorbing this new cost structure at scale.
03. FUNDING BRIEF
Bengaluru-based deeptech company DheyaTech has raised Rs. 43 crs. in a Pre-Series A funding round led by Avaana Capital. Founded in 2018 by Gurushankara K C, Abhinav Alva, and Chetan Kumar, the startup develops micro gas turbine engines and energy systems ranging from 20 kgf to 400 kgf of thrust for aerospace and power generation. With flight trials planned for Q4 2026 alongside confirmed orders from domestic and global OEMs.New Delhi-based metal procurement platform Enlight Metals has raised $1.5 million(Rs. 12.5 crs. approx.) at a valuation of $10 million from US-based investment firm Exar North Group. Founded to integrate steel sourcing and distribution with technology, the startup operates facilities across Pune, Mumbai, and Raipur, supplying over 500 manufacturers. Featuring an AI-led platform that reduces transaction processing time by 75% and supplier matching time from 5–7 hours to under three minutes.Delhi-NCR-based integrated aesthetic surgery platformTRUE ARTIS has raised Rs. 11.4 crs. in a seed funding round led by Zeropearl VC. Co-founded in 2025 by Ankit Joshi and Sandeep Upadhyay, the startup brings together plastic surgeons, hospital-grade safety, and dedicated recovery facilities across services like facial aesthetics, body contouring, and hair restoration. Having served over 10,000 clients and completed more than 400 surgeries.
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Frequently asked questions
Is UPI no longer free?
Most UPI payments remain free. The 0.4% MDR applies only to person-to-merchant transactions above ₹2,000, and more than 95% of P2M volume is exempt.
When does the UPI MDR take effect?
From 15 October 2026, with a cap of ₹300 per transaction.
Why did NPCI introduce the fee?
Katrela Ventures reads it as a targeted way to fund UPI infrastructure from high-value business payments without touching everyday use.
This edition was first published in the Katrela Ventures Daily Update newsletter on LinkedIn. Subscribe to get the digest every morning.
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