NPCI says proposed UPI MDR would largely fall on large corporates
NPCI estimates 96% of UPI transaction volume and 75% of value would remain outside proposed charges. It says only 10% of transaction value risks consumer fee pass-through, while 5% of MDR collections could fund small-merchant payment infrastructure.
What happened
NPCI says proposed UPI MDR would mainly be absorbed by large corporates, with only 10% of transaction value at risk of consumer pass-through. It plans to direct
Key facts
- 10% of overall UPI transaction value could risk consumer charge pass-through
- 80% of MDR would be collected from businesses with annual turnover above Rs 1,000 crore
- Businesses with annual turnover of Rs 1 crore and above are referenced
- 96% of UPI transaction volume and 75% of transaction value are not expected to attract charges
- Merchant base: around 60 million
- 75% of QR-code merchants have not received a transaction above Rs 2,000
- 5% of MDR collection proposed for an entrepreneur-support fund
- Fund could reach around Rs 3,000 crore over three years
- Estimated soundboxes: 20-25 million
Why this matters
Payments and commerce platforms may gain strategic value by bundling low-cost acceptance tools for small merchants as MDR-funded infrastructure expands.
What to watch
- Final MDR threshold, rate cap, merchant-category definitions and whether marketplace sellers are assessed individually or aggregated at platform level.
- Government or RBI clarification on consumer surcharge/pass-through rules and funding source for UPI ecosystem incentives.
- NPCI data on which transaction bands and merchant segments constitute the chargeable 4% of volume and 25% of value.
- PSP, bank and payment-aggregator announcements on revised enterprise pricing or merchant-service fees.
- Growth in QR and soundbox installations among small merchants and resulting UPI share gains versus cash and cards.
- Large retailer and platform responses, including reduced UPI-funded discounts, altered checkout ranking or higher seller service fees.
- Model UPI acceptance-cost exposure by entity, transaction size, merchant category and payment-aggregator contract.
- Review checkout design and promotions for potential UPI steering restrictions; avoid changes that could create consumer-fee or compliance risk.
- Renegotiate acquirer, PSP and soundbox contracts with volume-based pricing, caps and pass-through protections.
- Expand payment-mix reporting to compare UPI cost, conversion, fraud, refund rates and loyalty value against cards, wallets and cash-on-delivery.
- Prepare an SME merchant-acquisition plan if subsidized QR and soundbox deployment materially lowers onboarding costs.