Government weighs UPI MDR framework for select merchant payments from 15 October
The proposed framework would levy 0.4% MDR on certain person-to-merchant UPI payments above Rs 2,000, with a Rs 5 flat charge for select low-margin essential sectors such as fuel. Government consultations with banks and traders will focus on preventing merchants from passing charges to consumers.
What happened
Government will discuss UPI MDR implementation with IBA and merchants to prevent charges being passed to consumers. A new framework proposes 0.4% MDR on select
Key facts
- 0.4% MDR on certain person-to-merchant UPI transactions above Rs 2,000
- Rs 5 flat MDR for select essential low-margin sectors including fuel
- 15 October implementation date
What changed
Government will discuss UPI MDR implementation with IBA and merchants to prevent charges being passed to consumers. A new framework proposes 0.4% MDR on select UPI merchant payments above Rs 2,000, with a Rs 5 fuel-sector cap.
Why this matters
Prepare for potential 0.4% MDR on select UPI payments above Rs 2,000 by modelling acceptance-cost exposure, especially in high-ticket categories, while avoiding consumer surcharges pending final rules.
What to watch
- Final notification specifying eligible merchant categories, transaction threshold, MDR rate, tax treatment and implementation date.
- Definition and enforcement approach for prohibited consumer pass-through, including whether convenience fees, discounts or payment-method incentives are permitted.
- Whether the Rs 5 charge for fuel and other essential sectors is a cap, flat fee, or separate treatment, and which MCCs qualify.
- Issuer, acquirer, PSP and payment-aggregator circulars on pricing, settlement and technical implementation.
- Merchant association response, especially from fuel, grocery, electronics, marketplaces and small-business groups.