NPCI outlines 0.4% MDR on UPI merchant payments above ₹2,000

NPCI has outlined a revised UPI merchant-pricing framework: P2M payments above ₹2,000 would attract 0.4% MDR, capped at ₹300. Transactions up to ₹2,000 and small merchants receiving up to ₹1 lakh a month would remain zero-MDR.

— Source publishedTue, 15 Sept, 2026, 18:59 IST·First seen Tue, 15 Sept, 2026, 19:08 IST·Source Mint · Money

What happened

National Payments Corporation of India (NPCI) · NPCI announced revised UPI merchant pricing: 0.4% MDR, capped at ₹300, for P2M payments above ₹2,000. Low-value

Key facts

  • 0.4% MDR on P2M UPI transactions above ₹2,000
  • MDR capped at ₹300 per transaction
  • ₹5 flat MDR for transactions above ₹2,000 in specified categories
  • P2M transactions up to ₹2,000 remain MDR-free
  • Small P2PM merchants receiving up to ₹1 lakh monthly remain zero-MDR
  • More than 95% of UPI P2M transactions are below ₹2,000

Why this matters

Reassess partnerships with acquirers, payment gateways and fintechs as a new MDR pool on higher-value UPI payments could reshape merchant monetization and negotiation leverage.

What to watch

  • Formal NPCI circular, effective date, legal basis and confirmation of whether RBI/government approval is required.
  • Final definitions of P2M, merchant turnover, monthly ₹1 lakh eligibility, transaction aggregation, refunds, reversals and marketplace/platform liability.
  • Acquirer and PSP pricing announcements, including whether MDR is fully passed through and whether GST or other fees apply.
  • Government response on UPI subsidy funding and any change to the zero-MDR policy for merchants.
  • Merchant association, large retailer and consumer response; evidence of checkout steering or reduced UPI acceptance for high-value baskets.
  • Changes in high-ticket UPI authorization rates, payment-method mix, basket conversion and merchant discount expense after implementation.
  • Model blended payment-cost exposure by category, ticket band and store/online channel; isolate transactions above ₹2,000 and merchant entities above the ₹1 lakh monthly threshold.
  • Review checkout and POS payment steering rules, ensuring any incentive or surcharge approach complies with applicable payment-network and consumer-protection rules.
  • Renegotiate acquiring and payment-gateway contracts for pass-through treatment, volume tiers, routing controls and reporting on UPI ticket-size economics.
  • Prepare high-ticket conversion tests: card-on-UPI, credit-card offers, EMI, loyalty-funded payment incentives and split-payment options.
  • Assess whether franchisees, marketplace sellers and small-format stores qualify separately for small-merchant protection, and improve merchant-entity data hygiene.

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