NPCI’s proposed UPI MDR could charge merchants 0.4% on P2M payments above Rs 2,000

Under NPCI’s proposed framework, eligible merchant UPI transactions above Rs 2,000 could attract a 0.4% MDR, with charges capped at Rs 300 for payments above Rs 75,000. Merchants would not be permitted to pass the fee directly to customers, making payment-splitting policies a potential checkout friction point.

— Source publishedFri, 25 Sept, 2026, 14:32 IST·First seen Fri, 25 Sept, 2026, 14:44 IST·Source Financial Express · BrandWagon

What happened

National Payments Corporation of India (NPCI) · NPCI’s proposed UPI MDR framework would charge eligible P2M transactions above Rs 2,000 at 0.4%, capped at Rs

Key facts

  • October 15, 2026
  • Rs 2,000
  • 0.4%
  • Rs 75,000
  • Rs 300
  • Rs 6,000
  • Rs 24
  • three months

Why this matters

The proposal could increase the strategic value of PSP, acquiring and fintech partnerships that help merchants optimize UPI acceptance costs, reconciliation and payment-method steering without charging consumers directly.

What to watch

  • Final NPCI circular and any RBI or government endorsement, especially definitions of eligible P2M transactions, merchant segments and effective date.
  • Whether the Rs 2,000 threshold applies per transaction, per order, per customer or after payment splitting.
  • Exemptions for micro/small merchants, essential categories, government-linked payments, RuPay credit-on-UPI, wallets or particular merchant categories.
  • Industry responses from payment aggregators, banks, large retailers and merchant associations on fee absorption and routing changes.
  • Changes in UPI ticket-size mix, high-value P2M transaction volumes and merchant acceptance behavior after any announcement.
  • Government budget allocations or subsidy mechanisms for UPI payment infrastructure.
  • Consumer complaints or regulator action relating to payment splitting, tender steering or disguised surcharges.
  • Model incremental payment cost by ticket band, UPI share and category; prioritize exposure in electronics, appliances, jewellery, furniture, travel and premium omnichannel baskets.
  • Audit POS and online checkout flows for transaction-splitting behavior, since merchant-led splitting to avoid MDR could create compliance, reconciliation and customer-experience risk.
  • Renegotiate acquiring and payment-aggregator contracts, including blended UPI/card pricing, routing flexibility, settlement terms and volume-based rebates.
  • Expand low-friction alternatives for high-value baskets: bank transfer, card EMI, retailer finance, pay-later products and QR-linked loyalty incentives.
  • Avoid explicit UPI surcharges; instead evaluate neutral tender incentives and basket-level promotions that remain compliant with any final rule.
  • Prepare investor messaging separating gross MDR exposure from likely mitigation through tender mix, supplier-funded finance and acquirer economics.