Budget 2026: UPI Incentives Soar Five-Fold, But Industry Remains Unsatisfied

• Budget 2026 significantly increases incentives for RuPay debit cards and low-value BHIM-UPI person-to-merchant transactions, reversing an earlier proposed cut.
• The revised estimate for UPI-linked incentives for FY26 jumps five-fold to ₹2,196 crore from ₹437 crore, with FY27 pegged at ₹2,000 crore.
• Fintech stocks like Paytm and Mobikwik saw gains following the announcement, reflecting positive market sentiment.
• Despite the increase, the Payments Council of India argues the allocation is insufficient for sustaining 30 crore daily UPI transactions at zero Merchant Discount Rate (MDR).
• Industry experts suggest a low, regulated MDR for large merchants could reduce reliance on taxpayer-funded incentives and ensure long-term scalability.

Why It Matters: UPI incentives increased significantly in Budget 2026, but the industry seeks a more sustainable funding model.