NPCI says proposed UPI MDR would largely spare consumers, shift burden to large corporates
NPCI estimates 96% of UPI transaction volume and 75% of value would remain outside proposed MDR charges. It says 80% of collections would come from businesses with annual turnover above ₹1,000 crore, while 5% could support small-merchant payment infrastructure.
What happened
NPCI says proposed UPI MDR would largely be absorbed by large corporates, with only 10% of transaction value at risk of consumer pass-through. Most UPI volumes
Key facts
- 10% of overall UPI transaction value could risk charges being passed to consumers
- 80% of MDR would be collected from businesses with annual turnover above ₹1,000 crore
- 96% of UPI transaction volume and 75% of transaction value are not expected to attract charges
- Around 60 million active UPI merchants
- 75% of QR-code merchants have not received a transaction above ₹2,000
- 5% of MDR collection proposed for an entrepreneur-support fund
- Fund could reach ₹3,000 crore over three years
- 20-25 million payment sandboxes
Why this matters
Strategic buyers should evaluate merchant-acquiring, payment orchestration, and small-business infrastructure assets that could gain volume or funding if MDR is targeted at large corporates.
What to watch
- Formal Ministry of Finance, RBI, or NPCI consultation language defining turnover thresholds, MDR caps, merchant categories, and exemptions.
- Whether MDR applies to all UPI acceptance, only P2M payments, or selected high-value and online transactions.
- Clarification on who bears the charge: merchant, acquirer, issuer, platform, marketplace, or government subsidy pool.
- Large-retailer associations' responses and any announcements of UPI steering, checkout incentives, or pricing adjustments.
- Changes in UPI transaction mix at large chains, especially shifts toward cards, proprietary wallets, BNPL, or bank-account payment alternatives.
- Government budget allocations for UPI/payment acceptance incentives and any reduction in subsidy support.
- Acquirer and PSP pricing announcements for enterprise merchants, including device rental, settlement, reconciliation, and gateway fees.
- Segment merchant payment costs by turnover, UPI mix, and acquiring-bank exposure; prioritize chains likely to cross the ₹1,000 crore threshold.
- Model pass-through options for large retailers: absorb cost, negotiate acquiring discounts, promote store-wallet/card alternatives, or set payment-method-specific incentives where permitted.
- Assess whether large merchants can use MDR negotiations to consolidate acquirers and demand bundled services such as credit, fraud tools, reconciliation, and loyalty integration.
- Prepare small-merchant messaging emphasizing continued low-cost UPI acceptance, while monitoring whether acquirers introduce indirect fees for devices, settlement, or value-added services.
- Watch for large platforms and marketplaces to alter seller payment terms if their own collection costs rise, potentially passing costs downstream to third-party sellers.