UPI has been one of the strongest enablers of India’s digital commerce growth, and payment-linked cashback has long been one of the most familiar tools in a brand marketer’s playbook. But the introduction of a 0.4% Merchant Discount Rate on UPI transactions above Rs 2,000 puts a price on something brands and platforms have treated as a near-zero-cost route to conversion, and the question it raises is not whether UPI remains relevant but whether the marketing built around it will have to change. This IMPACT feature features Mihir Mehta, Managing Partner at 0101.Today, who argues that cashback will not disappear but the economics behind it will come under far greater scrutiny. He expects brands to move away from blanket incentives towards offers tied to a new user, a high-value basket, a specific merchant category or a defined loyalty behaviour, and frames the shift precisely: the marketing question changes from whether cashback can drive adoption to whether a specific incentive can create enough incremental value to justify both the reward and the transaction cost. Alongside perspectives from Re: Awakening Collective, Growster, Acture Media and Liqvd Asia, the piece makes a broader point that the MDR debate is ultimately a mirror, one that will show which marketing teams actually had a strategy and which ones just had a budget.
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