Finance Ministry seeks to prevent MDR charges being passed on to consumers
The Finance Ministry will consult banks, traders and other stakeholders on a proposed threshold-based MDR framework, aiming to ensure merchant payment charges are not passed to shoppers as the October 15 rollout approaches.
What happened
National Payments Corporation of India · Finance Ministry will consult banks, traders and stakeholders to prevent MDR charges from being passed to consumers as
Key facts
- 0.4% MDR
- ₹300 maximum MDR
- ₹2,000 transaction threshold
- ₹20,000 crore annual UPI operations cost
- October 15
Why this matters
Payment-platform, bank and merchant-acquirer partnerships may gain strategic value as retailers seek lower-cost acceptance solutions ahead of the October 15 rollout.
What to watch
- Publication of the consultation paper, including the proposed threshold definition: transaction value, annual merchant turnover, merchant category, or payment instrument.
- Whether the October 15 date is a binding implementation deadline, a consultation milestone, or a phased launch date.
- Rules on explicit surcharges versus differential pricing, cash discounts, convenience fees, and online delivery/payment fees.
- Bank and acquirer announcements on repricing, changes to merchant service fees, or new fixed-fee structures.
- Inclusion or exclusion of credit cards, debit cards, wallets, QR payments, cross-border cards, and marketplace sellers.
- Enforcement guidance, complaint channels, inspection powers, and penalties for retailers that pass payment costs to consumers.
- Model payment-acceptance cost exposure by tender type, transaction value band, store format, and merchant entity turnover.
- Review POS, e-commerce, and marketplace checkout flows for explicit or embedded card/payment surcharges that could draw regulatory scrutiny.
- Revisit acquiring contracts for MDR pass-through clauses, minimum-volume commitments, scheme-fee treatment, and termination rights.
- Prepare a supplier and franchisee communication plan distinguishing permitted price changes from prohibited payment-method surcharges.
- Accelerate lower-cost payment tenders where legally and commercially viable, while avoiding customer steering practices that could be viewed as surcharging.
- Participate in industry consultation with evidence on small-ticket transaction economics, fraud costs, settlement speed, and the effect of MDR on retail prices.