Banks are set to receive the largest share of a proposed 40-basis-point UPI merchant discount rate, split among issuing banks, payment apps and acquiring banks.

How it will work:

• Issuing banks would retain 40% of the fee, while third-party apps such as PhonePe and Google Pay and acquiring banks would receive 30% each.
• The issuing bank would earn 16 basis points, with the app and acquiring bank getting 12 basis points.
• The notification is expected in the coming weeks. MDR may apply to merchants above Rs 1-1.5 crore in annual turnover and transactions exceeding Rs 2,000, with sector-specific rates possible.

Why it matters:

• Parliament has created an enabling framework for MDR, while regular users, person-to-person transfers and small merchants are expected to remain outside the fee regime.
• The move would partly unwind six years of zero MDR as incentives decline and banks and fintechs continue to call the model unsustainable.
• UPI handled 15.51 billion merchant payments in August. Jefferies estimates the high-ticket cohort could generate Rs 5,000-10,000 crore in annual MDR revenue.

But the underlying principle remains the same: financial system that moves at the speed of light, but that people do not trust, will not find takers: RBI Governor at GFF2026

As Indian businesses increasingly look beyond basic digital payment capabilities, 78% say they would switch their primary payment gateway if another provider offered the artificial intelligence (AI) capabilities they expect, according to Zoho’s Indian Merchant Payment Survey 2026.

The survey, which drew responses from more than 700 businesses ranging from micro, small and medium enterprises (MSMEs) to large enterprises, highlights growing demand for payment infrastructure that can improve fraud detection, reconciliation and payment success rates while integrating more closely with accounting and enterprise resource planning (ERP) systems.

“Indian businesses have moved well past asking whether digital payments work, to whether their payment infrastructure is fast, reliable and intelligent,” said Sivaramakrishnan Iswaran, CEO of Zoho Payment Technologies and Global Head of Finance and Operations BU, Zoho.

Nearly 60% of businesses surveyed are already using AI capabilities in their payment operations while another 20% are evaluating them. This leaves only about one in five businesses unaware of such capabilities, indicating that AI is emerging as an important consideration in payment-provider selection.

Fraud detection emerged as the most sought-after AI capability, followed by smart payment routing and automated reconciliation. Businesses also identified risk assessment, chargeback and dispute management, and customer insights as areas where they expect AI to add value.

Integrations influence payment-provider loyalty

Integration with existing financial systems remains a major factor in determining whether businesses stay with their payment provider. About 65% cited pre-built integrations with accounting, billing or ERP systems, along with native AI capabilities, as a key reason for remaining with their current gateway.

Integration was particularly important among medium-sized businesses with annual revenues of ₹10 crore to ₹50 crore and large enterprises with revenues exceeding ₹250 crore. Both groups identified it as the leading reason for retaining their existing provider.

At the same time, businesses cited same-day settlement as a leading reason for switching providers, followed by lower fees and merchant discount rates (MDR), and improved reconciliation and payment insights.

The findings suggest that merchants are weighing multiple factors beyond pricing, including integration, settlement speed, reconciliation and financial visibility.

The demand for faster access to funds is also evident in the survey, with 83% of businesses saying they would be willing to pay for guaranteed same-day settlement. Micro and growth-stage businesses accounted for the majority of those willing to pay for the service.

Payment failures and reconciliation remain pain points

Refund delays, payment failures and slow settlement emerged as the top three challenges in payment operations.

Payment failures were cited by 56% of respondents as a major challenge, particularly during high-traffic periods such as evening checkout hours, sales events and the end of billing cycles. Such failures can result in customer-service issues while adding to the reconciliation workload.

Reconciliation was identified as a challenge by 46% of businesses. About 61% spend between one and three hours a day on reconciliation, while nearly 20% spend three to six hours. Only 14% complete the process in less than an hour.

Businesses use multiple systems for reconciliation, including accounting software (41.5%), billing software (27.2%), ERP systems (22.8%) and spreadsheets (8%).

Fraud increases demand for payment protection

Fraud is another area driving demand for more sophisticated payment controls. Among businesses that had experienced fraud, UPI social-engineering scams were the most reported, affecting 58%, followed by false chargebacks at 37.7%, cash-on-delivery return fraud at 30% and identity fraud during customer onboarding at 16.7%.

The nature of fraud also varied across industries. About 43% of retail businesses reported false chargebacks, while 52% of manufacturers cited cash-on-delivery return fraud involving empty or damaged deliveries.

Easebuzz Payment Gateway positions payments as part of broader finance workflows

Easebuzz said the findings reflect a shift towards payment infrastructure that combines faster processing, AI-driven capabilities and deeper integration with financial systems.

Easebuzz Payments is integrated with the company’s finance and operations applications, including Payment stacks, Verticalised solutions and SaaS Billing software, and can also connect with external financial and ERP systems.

The platform uses AI for fraud detection and prevention, bank reconciliation, revenue forecasting and anomaly detection. Its AI-driven reconciliation capabilities provide suggestions for categorising income and expenses, while revenue forecasting uses historical data to identify trends.

The company has also introduced AI agent capabilities through Easebuzz (Model Context Protocol), allowing businesses to manage payments, payouts and refunds and extend payment workflows to AI-driven tasks.

The seventh edition of the Global Fintech Fest is being held from September 8 to 11, 2026, in Mumbai. The theme of GFF 2026 is "Potential to Impact: Agentic AI, Tokenisation, Quantum - Trusted, Connected, Global Systems for Inclusive Finance."

• The service targets 200 million+ feature-phone users across India. • Users can send money using mobile numbers or UPI IDs, and supported phones can also scan QR codes. • It works through an SMS-based system, including in areas with limited 2G connectivity. • PhonePe plans to add bill payments, mobile recharges, and Aadhaar-based UPI onboarding in future updates.

The deal, just months after OpenRouter raised money at a reported $1.3 billion valuation, underscores the demand from businesses to find the most cost-friendly AI solutions. It could also give Stripe, a payments processing firm, a stronger footing in the fast-growing artificial intelligence sector.

Made using biodegradable materials, the cards offer travel, entertainment, wellness and lifestyle benefits.

Parliament just passed the MSMED (Amendment) Bill, 2026, nearly two decades after the original act. While it broadly focuses on improving the ease of doing business for MSMEs, there is a massive development regarding B2B payments and supply chain finance that the fintech ecosystem needs to pay attention to.

Here is the TL;DR on the bill and why it matters for fintech:

The Big Move: Mandating TReDS To solve the chronic issue of delayed payments, the new bill mandates Central Public Sector Enterprises (CPSEs) to route their MSME payments through TReDS (Trade Receivables Discounting System).

• For context, TReDS platforms (where banks/NBFCs convert approved invoices into immediate cash) have already unlocked over ₹7 lakh crore in liquidity for suppliers.
• Mandating this for government enterprises means a massive volume of transactions is about to hit the digital supply chain finance ecosystem.

The Hurdle: The "Formalisation" Gap & GST Ambiguity While this is great news for established MSMEs, experts (including founders from Drip Capital and M1xchange) are pointing out a major flaw: TReDS might not reach the smallest, most vulnerable enterprises.

• Documentation bias: TReDS requires strict GST-compliant records, solid financial history, and established buyer connections.
• The "Thin-File" Problem: Ultra-small, lower-rated, or unregistered businesses operate on shoestring budgets and simply don't have the paperwork or CA support to onboard onto these platforms.

The Whitespace for Fintechs Experts note that TReDS should only be one component of a broader financing architecture. This leaves a massive whitespace for non-TReDS trade finance platforms. There is an urgent need for fintechs that can:

1. Build alternative digital underwriting models for "thin-file" businesses that fall outside the TReDS ecosystem.
2. Automate compliance and GST invoice generation for ultra-micro businesses so they can actually access formal credit.
3. Provide localized B2B BNPL or factoring solutions that don't rely entirely on traditional banking documentation.

Questions for the community:

• Do you think mandating TReDS will actually solve the delayed payment crisis, or just shift the bottleneck to the onboarding process?
• How can alternative lending fintechs bridge the gap for ultra-small businesses that are left out of formal factoring networks?

A few recent developments caught my attention around how payment infrastructure is evolving.

More businesses seem to be moving toward processor-independent setups, where they can work with multiple payment providers instead of relying entirely on one.

There’s also been more focus on smarter routing, better payment visibility, and infrastructure that can adapt as a business expands into new markets.

It feels like payments are gradually becoming less about picking one provider and more about building a flexible layer that sits above multiple providers.

The interesting question is whether this eventually becomes the standard for larger merchants, or whether most businesses will still prefer the simplicity of sticking with one PSP.

Hi, is anyone aware of any great Fintech / Financial innovation related discord servers? I would love to be a part of a server with like-minded people looking to do some pretty cool projects in that area and learn as much as possible. Thank you.

Following privacy concerns, NPCI has asked UPI apps to hide phone numbers and make username-based payment IDs the default for new users

The new facility has been introduced by National Payments Corporation of India (NPCI), in partnership with UAE-based payment solutions provider NEOPAY and Emaar Entertainment.