NPCI sees no immediate UPI MDR review, citing technology and cybersecurity funding needs
NPCI will monitor data before revisiting the 0.4% MDR on P2M UPI payments above ₹2,000, capped at ₹300. The charge could raise acceptance costs for some merchants, though NPCI says most will remain unaffected.
What happened
NPCI says it will not immediately alter newly reinstated UPI MDR charges, arguing fees will fund technology, AI, cybersecurity and infrastructure. The 0.4%
Key facts
- 0.4% MDR on P2M UPI transactions above ₹2,000
- ₹300 maximum MDR per transaction
- 20 million merchants use soundboxes
- 35-40% mobile-payment adoption in India
- UPI target of 1 billion users
- ₹13,000-15,000 crore estimated first-year ecosystem recovery
- ₹20,000-21,000 crore annual UPI ecosystem operating cost
- 900 merchant category codes
- 60 million UPI merchants
- 75% of merchants have no transactions above ₹2,000
- 10% of merchants may pass on some charges
- ₹1 crore gross annual business threshold
Why this matters
Payments providers and merchant-acquiring platforms may gain partnership opportunities around cost optimization, routing, and cybersecurity, while the lack of an immediate review reduces near-term regulatory uncertainty.
What to watch
- NPCI clarification on effective date, merchant/category eligibility, enforcement mechanics and treatment of split transactions.
- Monthly P2M UPI ticket-size distribution above ₹2,000 and any decline in UPI share for high-AOV merchants.
- Retailer and industry-association representations seeking exemptions for essentials, small businesses or specific merchant categories.
- Payment-aggregator changes to merchant pricing, onboarding terms, UPI routing and surcharge policies.
- Growth in card, EMI, BNPL and bank-transfer usage at electronics, travel, jewellery, healthcare and premium retail checkouts.
- Evidence of merchants raising free-shipping thresholds, reducing discounts or changing basket architecture to protect margins.
- Quantify exposure by average order value, UPI tender mix and gross-margin profile, prioritizing categories where a large share of orders exceed ₹2,000.
- Review checkout design and payment acceptance rules to ensure any tender steering is transparent and compliant while preserving conversion.
- Negotiate acquiring and payment-aggregator economics, including blended MDR, routing options and settlement-linked incentives.
- Build scenario pricing for absorbing MDR versus passing through costs, with separate policies for online, store and marketplace transactions.
- Monitor whether competitors introduce UPI-specific discounts, minimum-order thresholds, card EMI promotions or cash-back offers for high-value baskets.