On this page
IIT Bombay report urges limiting NPCI's proposed 0.4% UPI MDR to merchants with turnover above Rs 50 crore
Our read
If NPCI adopts IIT Bombay's Rs 50 crore turnover cut-off, merchants below it would avoid the proposed 0.4% UPI charge on payments above Rs 2,000, while larger omni-channel retailers would carry most of it, so big-ticket checkout margins should be modelled now.
Watch
A final NPCI circular limiting the 0.4% MDR to merchants above ₹50 crore turnover before rollout would mean small merchants stay free and large retailers absorb the cost.
The report,
IIT Bombay's report says NPCI's proposed 0.4 per cent UPI MDR on P2M payments above Rs 2,000 needs rationalisation to protect public trust. It suggests limiting the charge to merchants with turnover above Rs 50 crore and exempting loan EMI repayments.
One email each morning: the day’s top moves in Indian retail, why each matters and what to watch. Free. Stop any time.
Channel facts
From the report. Source details below
| MDR cap for transactions of Rs 75,000 or more: | Rs 300 |
|---|---|
| Flat fee on essential services above Rs 2,000: | Rs 5 |
| Capital markets MDR rate: | 0.02 per cent |
| Share of proposed MDR from merchants above threshold: | about 90 per cent |
| NPCI MDR circular date: | September 15 |
What it means for online and offline
A Rs 50 crore threshold and an exemption for loan EMI repayments would make merchant size and EMI-linked flows the key variables in diligence on payment-acceptance contracts and checkout or financing partnerships until NPCI finalises the rules.
Signals to track
- Whether any revised circular exempts loan EMI repayments
- Public response from large-merchant and retail industry bodies to the 0.4% charge
- Any RBI or Ministry of Finance statement on the 15 September circular
- Change in UPI P2M volumes above ₹2,000 once any charge applies
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- NPCI is likely to revise the 15 September proposal rather than withdraw it, with a turnover threshold for merchants the most probable change.
- Expect NBFCs and banks to press for loan EMI repayments to be exempt, since the charge would raise their collection costs.
- Large merchant and retail bodies may argue against the 0.4% charge, because merchants above ₹50 crore would bear most of it.
- The RBI and the Ministry of Finance are likely to weigh in before any charge starts, given the concern about public trust in UPI.
- Small merchants may keep nudging customers toward cash or cards if the ₹2,000 threshold survives without a turnover carve-out.