Government exempts RuPay credit-card UPI payments from new 0.4% MDR
The clarified UPI fee regime, effective October 15, applies to select bank-account-to-merchant payments above ₹2,000. RuPay credit card-linked UPI and pre-sanctioned credit-line payments remain exempt, while small merchants retain zero MDR.
What happened
Government clarified that RuPay credit card-linked UPI and pre-sanctioned credit-line payments are exempt from the new 0.4% MDR. The fee regime targets select
Key facts
- 0.4% MDR
- ₹2,000 transaction threshold
- ₹300 maximum MDR per transaction
- ₹5 flat MDR for specified categories
- 0.02% MDR for capital-market transactions
- 4% of merchant transactions expected to be covered
- more than 95% of P2M UPI payments remain MDR-free
- 5% of MDR collections allocated to small-merchant acceptance fund
Why this matters
Prioritize partnerships around RuPay credit-card UPI and credit-line-linked UPI acceptance, where the MDR exemption strengthens the strategic case for merchant-acquiring and loyalty integrations.
What to watch
- Final operational circulars defining covered merchant categories, transaction thresholds, exemptions and whether fees apply per transaction or on aggregate value.
- RuPay credit-card UPI transaction growth, active-card issuance and approval-rate trends after October 15.
- Acquirer pricing changes, MDR pass-through proposals and payment-gateway routing features for high-value UPI.
- Merchant behavior at large chains: payment-method nudges, minimum basket thresholds, rewards differentials or restrictions on selected UPI rails.
- Consumer complaints or regulatory response if retailers steer customers away from bank-account UPI or introduce payment-method-linked charges.
- Whether competing card networks secure comparable UPI-linked credit treatment or regulators broaden exemptions.
- Promote RuPay credit-card UPI at checkout for eligible high-value baskets, especially in electronics, apparel, travel, jewellery and durable-goods categories.
- Audit payment acceptance costs by merchant entity, transaction value, UPI rail and customer funding source; revise tender-routing rules where permitted.
- Negotiate issuer and acquirer campaigns around RuPay credit-on-UPI, including instant discounts, loyalty multipliers and EMI conversion offers.
- Update cashier scripts, app checkout messaging and QR/POS flows so customers understand eligible payment options without creating friction.
- Model margin exposure for bank-account UPI transactions above ₹2,000 and avoid blanket surcharge decisions until final enforcement and merchant-category interpretation are clear.