NPCI panel may introduce 0.3% MDR on UPI merchant payments above ₹2,000
An NPCI-led committee is reportedly expected to decide within days on a proposed 0.3% merchant discount rate for UPI payments above ₹2,000. If adopted, the move would raise payment-acceptance costs for larger merchants, while smaller transactions and RuPay debit-card payments may remain free.
What happened
National Payments Corporation of India (NPCI) · An NPCI-led committee is expected to decide a potential 0.3% MDR on UPI merchant payments above Rs 2,000. RuPay
Key facts
- Rs 2,000 UPI transaction threshold
- 0.3% proposed MDR
- Rs 1.5 crore annual-turnover threshold considered
- 0.15% UPI incentive equivalent MDR
- 1-3% credit-card MDR
- up to 0.9% debit-card MDR
- Rs 2,000 crore 2026-27 budget allocation
- Rs 20,700 crore estimated UPI operating cost
- Rs 1.38 operational cost per transaction
- 150 billion P2M transactions
Why this matters
Payments, acquiring, and merchant-software platforms may become more strategically attractive if MDR is introduced, as larger merchants seek cost-optimization, routing, and reconciliation capabilities.
What to watch
- Formal NPCI, RBI or Finance Ministry notification specifying the MDR rate, transaction threshold, effective date and who bears the charge.
- Clarification on applicability to QR-based UPI, collect requests, UPI credit lines, UPI-linked RuPay credit cards, online gateways and recurring mandates.
- Government commitment or withdrawal of subsidy support for UPI transaction processing.
- Responses from major payment aggregators, banks and large retailers on pass-through pricing or revised merchant service fees.
- Monthly UPI mix data showing whether high-value transactions shift to cards, NEFT/IMPS, cash, EMI or split payments.
- Consumer-protection guidance on checkout surcharges or merchant steering for UPI payments.
- Model payment-acceptance cost exposure by UPI ticket size, merchant category and store format; separate transactions above and below ₹2,000.
- Prepare checkout steering for high-value purchases: cards, RuPay credit, BNPL/EMI, account-to-account transfer and retailer financing options.
- Review payment-acquirer and aggregator contracts for pass-through clauses, pricing-reset rights and volume-based rebates.
- Assess whether high-margin categories can absorb MDR versus categories where a checkout surcharge, minimum ticket threshold or discount for alternate tenders may be viable.
- Engage industry bodies and payment partners on exemptions for essential goods, small merchants, franchisees and omnichannel transactions.
- Monitor whether merchant-funded UPI rewards decline as aggregators redirect incentive budgets toward high-ticket tender conversion.