Government denies ATM-stocking directive amid reports of proposed UPI merchant charges
The government has rejected claims that banks were asked to stock ATMs ahead of changes to UPI fees. Reports point to a proposed 0.4% merchant discount rate on select person-to-merchant UPI payments above Rs 2,000 from Oct. 15, 2026.
What happened
The government denied reports that banks were told to stock ATMs before new UPI charges. A proposed 0.4% merchant discount rate would apply to select
Key facts
- Rs 2,000
- October 15
- 0.4%
- six years
- $1.1 billion
Why this matters
Assess payment-platform and acquiring partners for MDR pass-through risk and opportunities to negotiate lower-cost routing or bundled payments services before the proposed 2026 change.
What to watch
- Formal Ministry of Finance, RBI or NPCI notification specifying whether MDR applies, the transaction threshold, merchant categories, effective date and tax treatment.
- Clarification on whether the 0.4% charge is capped per transaction, borne fully by merchants, shared with customers, or subsidized by government.
- Union budget or payments-subsidy announcements indicating continued funding for UPI merchant acceptance.
- Payment-gateway and bank circulars changing UPI pricing, settlement terms, incentive programs or merchant onboarding requirements.
- Merchant-association responses from modern retail, e-commerce, travel, fuel, healthcare and electronics sectors.
- Changes in UPI transaction mix around the Rs 2,000 threshold, including order splitting, migration to cards, cash, bank transfer or pay-later options.
- Model UPI cost exposure by transaction band, especially orders above Rs 2,000, and compare it with card MDR, cash handling and COD costs.
- Review checkout routing and payment-service-provider contracts for the ability to steer high-value payments toward lower-cost rails without harming conversion.
- Segment customer payment behavior by basket size; identify categories where an MDR could pressure gross margin or require revised promotional funding.
- Ask acquiring banks, payment gateways and POS providers whether any pass-through, settlement-fee or device-fee changes are being prepared ahead of October 2026.
- Avoid making ATM-cash contingency decisions based on the denied stocking-directive report; monitor formal RBI, finance ministry and NPCI notifications instead.
- Prepare merchant communications and finance controls in case an MDR is announced, including invoice treatment, reconciliation fields and dispute handling.