GFF 2026 | PhonePe, MobiKwik and Razorpay CEOs back UPI fees to fund next growth phase

A merchant fee on UPI transactions could give fintech companies a new way to make money from payments while encouraging them to invest more in the ecosystem, the CEOs of PhonePe, MobiKwik and Razorpay said.

Speaking to CNBC-TV18 at the Global Fintech Festival 2026, PhonePe Co-Founder and CEO Sameer Nigam said introducing a merchant discount rate (MDR) would give payment companies a monetisation model directly linked to the transactions they process.

“Over the last six years, there's been a bit of distortion in the market where everyone's trying to find alternate ways to monetise the core payments business model,” Nigam said.

He said the current model could limit the pace at which UPI expands. The platform has reached around 500 million people so far, leaving at least another 500 million potential users to be brought into the system, he said.

The next phase of UPI's expansion would require significant investment, Nigam said, adding that the ecosystem would be better served if companies could generate revenue by building payment solutions.

“I think it'll be material enough to keep investing in growing UPI rails and reach,” he said.

Small fee, big revenue pool

MobiKwik MD and CEO Bipin Preet Singh said MDR could address a longstanding problem for fintech companies: generating revenue directly from UPI payments.

“For a long period of time, UPI was considered a business model where there is no money to be made, at least in payments,” Singh said.

Even a small fee on UPI's large transaction base could create a meaningful revenue and profit pool, he said.

Singh said the exact split of revenue between banks, fintech companies and other participants was less important than ensuring that each part of the ecosystem had an incentive to invest and expand.

“Even if your partner makes more money, it's still good because what it means is that they have the incentive to invest and expand,” he said.

Razorpay Co-Founder and MD Shashank Kumar said MDR could similarly help revive investment in payments, particularly as companies continue to spend on research and development.

Most UPI transactions are below ₹2,000, particularly among smaller merchants, Kumar said, arguing that these businesses should not be required to pay MDR.

But even if transactions above ₹2,000 account for only 5% or 10% of the total, they could still create a meaningful revenue opportunity for the broader ecosystem, he said.

The payments ecosystem includes banks, payment aggregators and third-party application providers, all of which need sustainable business models to continue investing, Kumar said.

Where UPI's next profits could come from

The three executives said the bigger opportunity could ultimately come from financial products and services built on top of UPI rather than from transaction fees alone.

Nigam said UPI could eventually become a broader financial-services rail rather than simply a successful payments platform.

He pointed to products such as credit on UPI, virtual credit, EMIs, buy-now-pay-later offerings and credit cards without a physical card as examples of services that could be built on the existing infrastructure.

“My hope and my dream is, 10 years later, when we are looking back, we are not talking about UPI as a great payment success. We are talking about UPI as a great rail success globally,” Nigam said.

Singh said lending and wealth management could offer larger profit pools.

Lending is an immediate opportunity, he said, with digital payment infrastructure making it possible for consumers to access loans through apps at any time. He also pointed to investments in stocks, mutual funds and gold as areas with significant room for growth.

Agentic payments could be next

Kumar highlighted UPI AutoPay, central bank digital currency (CBDC) and agentic commerce as potential areas of growth.

UPI AutoPay has already helped lenders with collections and supported subscription-based content businesses, he said.

The next step could be using UPI as the payment infrastructure for AI agents and agent-to-agent transactions. Businesses could eventually authorise agents to make small-value payments on their behalf, reducing the friction involved in routine transactions, Kumar said.

UPI could also potentially serve as infrastructure for CBDC distribution, he said, allowing programmable money and real-time settlement to be used more widely.

Indian fintechs look overseas

The executives also pointed to opportunities for Indian fintech companies to take technologies and business models developed in India to international markets.

Nigam said the next phase for Indian fintech companies should involve taking their products global, arguing that India had developed financial-services technology that is low-cost, scalable and innovative.

He said PhonePe's UAE licences represent its first overseas foray and expressed hope that the company and others would take Indian fintech innovations to international markets.

Singh said he was bullish on AI and believed Indian fintech technology could be exported to other countries. Some products developed in India were ahead of what had been considered possible in developed markets, he said.

Kumar said India's experience with real-time payment infrastructure could help Indian fintech companies work with payment institutions, businesses and consumers in other countries.

Banks and fintechs set to work more closely

Despite growing competition, the three CEOs expect banks and fintech companies to deepen their partnerships.

Nigam said lending products, agentic experiences and other emerging financial services would require fintechs to work more closely with banks.

“All these lending products and agentic experiences and all these different things we're talking about will require the fintechs to partner more deeply with the banks, not less,” he said.

Singh said there would continue to be competition over who controls the customer relationship, but described the relationship between banks and fintechs as having settled into a stable equilibrium.

Kumar said banks increasingly view fintech companies as genuine innovators. Partnerships would continue to evolve, he said, with fintechs also providing payment and agentic technology to banks.