Government to monitor UPI MDR rollout on payments above ₹2,000
UPI transactions up to ₹2,000 remain exempt from MDR. For merchant payments above that threshold, NPCI has set a 0.4% charge, capped at ₹300 for transactions of ₹75,000 and above, with monitoring aimed at preventing merchants from passing costs to consumers.
What happened
The government will monitor MDR implementation on high-value UPI payments to prevent merchants passing charges to consumers. UPI payments up to ₹2,000 remain
Key facts
- MDR rollout from October 15
- UPI transactions up to ₹2,000 exempt
- 0.4% MDR on P2M UPI transactions above ₹2,000
- ₹300 MDR cap for transactions of ₹75,000 and above
- 30% market-share limit for third-party application providers
Why this matters
Prioritize partnerships or capabilities that reduce payment-acceptance costs, optimize checkout routing, and help merchants comply with scrutiny of surcharge pass-through practices.
What to watch
- Formal government or NPCI clarification on whether merchants may pass MDR to consumers, directly or indirectly.
- Merchant complaint volumes, enforcement actions and mystery-shopping evidence of UPI convenience fees.
- UPI payment mix and conversion rates for baskets just above ₹2,000, especially in electronics, apparel, jewellery and travel.
- Card, EMI and net-banking share gains in transactions above ₹2,000.
- Any revision to the MDR rate, threshold, cap, subsidy mechanism or exemptions for merchant segments.
- Model 40 bps MDR exposure by category, average order value and UPI mix; isolate transactions above ₹2,000 and the ₹300 cap effect above ₹75,000.
- Keep consumer-facing prices unchanged initially; avoid explicit UPI surcharges while monitoring enforcement guidance.
- Offer payment-method nudges at checkout for high-ticket purchases, including card EMI, bank-transfer discounts where permitted, and loyalty incentives.
- Review contracts with payment aggregators and banks to confirm MDR pass-through, settlement timing, dispute handling and reporting obligations.
- Train store staff and marketplace sellers against informal surcharging or payment refusal that could create regulatory and reputational risk.