UPI payments to merchants have had MDR for a while now. And there is a government fund to compensate banks as well. Cost on its own isn't the real reason for ba

UPI payments to merchants have had MDR for a while now. And there is a government fund to compensate banks as well. Cost on its own isn't the real reason for banks to be unhappy. Banks were unhappy because they were not used to this kind of pace of feature growth and user growth. It put operational stress on their teams and their relatively old systems (much newer than western banks). They also saw it as a zero-sum game where UPI had opportunity cost w.r.t growth/profit in credit cards. But the reality is somewhat different. Affluent class still uses credit cards (for loyalty points, irony!) and cards market has grown quite well too. And as digital usage expands and banks have embraced digital, they see UPI as an engagement driver and they make money on selling other financial products including credit cards and loans. Anyone who isn't thinking this way will be killed by competition soon enough.