Government denies ATM-stocking claim; says most UPI merchant payments remain free
The government dismissed reports that banks were told to stock ATMs ahead of a UPI fee rollout. Under the cited framework, P2P transfers and merchant payments up to Rs 2,000 remain free; specified higher-value merchant transactions may carry 0.4% MDR, capped at Rs 300.
What happened
Government denied reports that banks were told to stock ATMs before UPI fees. P2P payments and most small merchant transactions remain free; specified merchant
Key facts
- 0.4% MDR on specified merchant transactions above Rs 2,000
- MDR capped at Rs 300 for transactions of Rs 75,000 and above
- 96% of merchant transactions expected to remain unaffected
- P2P UPI transactions remain free
- Merchant payments up to Rs 2,000 remain free
Why this matters
Prioritize payment partnerships and checkout capabilities for higher-value merchant transactions, where capped MDR could create new economics without disrupting mass-market UPI usage.
What to watch
- Publication of the definitive covered merchant categories, rail types and effective date for the 0.4% MDR provision.
- Payment-acquirer notices changing merchant discount rates, settlement terms or QR acceptance contracts.
- UPI transaction mix shifts above Rs 2,000, particularly in electronics, travel, jewellery, furniture and omnichannel checkout.
- Retailer adoption of tender-specific discounts, checkout nudges or minimum-value thresholds.
- ATM cash-withdrawal volumes and cash-on-delivery rates; a sustained increase would indicate consumer trust erosion beyond the stated policy scope.
- Further government clarification on subsidy funding, zero-MDR policy durability and treatment of payment aggregators.
- Keep UPI as the default tender for sub-Rs-2,000 checkout flows; avoid premature cash-focused operational changes.
- Audit merchant categories and transaction bands that could fall under specified higher-value MDR rules.
- Build payment-routing rules for high-value baskets across UPI, cards, EMI, net banking and account-to-account transfer options.
- Model whether absorbing MDR, offering cash/card incentives, or using basket-level pricing produces the best margin outcome in affected categories.
- Train store teams and customer support to communicate that ordinary UPI payments remain free, reducing misinformation-driven checkout friction.