UPI at 10: two changes that could alter it

As #UPI completes a decade, two proposed changes could fundamentally alter how we experience it!

1️⃣ 1-Hour Delay on Transfers (>₹10,000)
UPI became what it is because of one promise: Instant money transfer!
Introduce a 1-hour delay, and UPI quietly turns into #NEFT 2.0!
If you are sending more than 10K, the system will give you FREE 60 minutes of "anxiety"!
Yes, #fraud prevention is important, but better solutions already exist:
- Cooling-off for new beneficiaries
- Transaction limits
- Trusted payee lists
Most banks use these rules, in one form or another, to reduce fraud in NEFT/IMPS transfers.
Another good alternative can be to tighten the #KYC norms for the merchants and give their QR a verified status, like that given to Mutual Funds AMCs. These merchants can have higher transaction limits.

2️⃣ #MDR on UPI
UPI scaled because it was: Free. Simple. Ubiquitous!
From roadside vendors to large retailers, everyone adopted it.
Now comes MDR, because: “Someone has to pay for the system.”
But here’s the uncomfortable truth: The moment you charge, the customer's behavior changes.
- Small merchants start preferring cash again
- Margins get squeezed
- Adoption slows down

We have already seen this; even major merchants have blocked #Rupay CCs on UPI rails, thanks to MDR for transactions over Rs 2000!

UPI needs to be considered as a nation-building exercise, and the government should continue funding the initiative, since it helps in -
- Better tax visibility
- Lower cash dependency
- Reduced currency printing costs, minting coins

Some alternate ways to collect funds to subsidize UPI -
- Charge cash, not digital. Higher #ATM withdrawal fees, especially in Urban areas where UPI usage has expanded astronomically

UPI won because it was frictionless.
Start adding friction…
and the system won’t break overnight.
But it will slowly lose what made it powerful.

This week, I will try to share some more posts on UPI. It is amazing and has changed the way we Indians transact.
If you have any special experience with UPI or have any questions about the business models, do share here!