Govt says 0.4% MDR will apply to select merchant UPI payments above ₹2,000
UPI person-to-person transfers will remain free, according to the government. A 0.4% merchant discount rate is proposed only for select person-to-merchant transactions above ₹2,000, creating a potential incremental payment-acceptance cost for retailers handling higher-value UPI bills.
What happened
Government says UPI person-to-person payments will remain free regardless of value. A 0.4% merchant discount rate will apply only to select person-to-merchant
Key facts
- 0.4% MDR
- ₹2,000
What changed
Government says UPI person-to-person payments will remain free regardless of value. A 0.4% merchant discount rate will apply only to select person-to-merchant UPI transactions exceeding ₹2,000, affecting payment acceptance costs for Indian retailers.
Why this matters
Retailers should map UPI ticket sizes and payment flows to quantify potential 0.4% MDR exposure on eligible merchant transactions above ₹2,000 while keeping customer messaging clear that P2P transfers remain free.
What to watch
- Publication of final notification defining 'select' P2M transactions, merchant categories, threshold calculation and effective date.
- Clarification on whether ₹2,000 applies per transaction, invoice, customer-day total or net settled amount.
- Whether MDR is borne by merchant, subsidized by government/banks, or permitted to be passed to consumers.
- Exemptions for small merchants, essential goods, QR-based transactions, specific MCCs or government-linked payment rails.
- NPCI, RBI, finance ministry and payment-aggregator guidance on routing, split payments and anti-circumvention practices.