Centre weighs 0.5% MDR on UPI payments above Rs 2,000 for large merchants
The government may reintroduce a 0.5% merchant discount rate on UPI transactions of Rs 2,000+, sparing businesses under Rs 1.5 crore turnover. Only about 4% of P2M transactions exceed Rs 2,000, but larger retailers face fresh payment costs and potential pass-through pricing pressure.
What happened
The Centre may reintroduce a 0.5% MDR on UPI transactions of Rs 2,000+ for large merchants, exempting businesses under Rs 1.5 crore turnover. This directly
Key facts
- 0.5% MDR
- Rs 2,000 threshold
- Rs 1.5 crore turnover exemption
- 4% of P2M transactions above Rs 2,000
- 86% below Rs 500
- 60 million merchants
- 241.62 billion FY26 transactions
- Rs 314 lakh crore value
Why this matters
A reintroduced UPI MDR for large merchants reshapes payment-cost economics and could accelerate partnership or pricing-strategy conversations across the retail payments ecosystem.
What to watch
- Official finance ministry / NPCI notification or denial
- Reaction from CAIT and merchant associations
- Any change to the Rs 1.5 cr turnover or Rs 2,000 transaction thresholds
- Fintech/aggregator earnings commentary on MDR revenue potential
- Signs of transaction-splitting or rail-shifting behavior in UPI P2M data
- Large retailers model MDR cost exposure on high-ticket UPI mix and evaluate surcharge vs. absorb decisions
- Payment aggregators/fintechs lobby against reintroduction, citing incentive to preserve UPI free-tier
- Merchants nudge high-value customers toward cards/other rails or split transactions below Rs 2,000
- Retail bodies seek clarity on turnover-threshold definition and compliance mechanics