NPCI sets 0.4% MDR on select UPI merchant payments above Rs 2,000
Effective October 15, 2026, NPCI will levy 0.4% MDR on select P2M UPI transactions above Rs 2,000. The charge is capped at Rs 300 for transactions of Rs 75,000 or more, raising payment-acceptance costs for affected merchants.
What happened
NPCI will impose a 0.4% MDR on select P2M UPI transactions above Rs 2,000, with fees capped at Rs 300 for transactions of Rs 75,000 or more, affecting merchant
Key facts
- 0.4% MDR
- Rs 2,000 transaction threshold
- Rs 300 fee cap
- Rs 75,000 and higher transactions
- October 15, 2026
Why this matters
Prioritize partnerships or acquisitions in payment orchestration, merchant analytics, and alternative acceptance methods that can help retailers steer covered high-value UPI transactions and manage rising acceptance costs.
What to watch
- NPCI clarification on the precise merchant categories, transaction types, payer instruments, and entities covered by 'select' P2M payments.
- Bank, acquirer, and payment-aggregator notices specifying whether and how the 0.4% MDR will be passed through to merchants.
- RBI, government, or industry response on UPI subsidy policy, MDR exemptions, or potential revisions before implementation.
- Changes in high-value UPI authorization success rates, checkout abandonment, and migration to cards, EMI, or bank transfers after launch.
- Merchant association reactions, especially from electronics, travel, healthcare, jewellery, and organized retail sectors.
- Evidence of retailers reducing UPI-specific offers or introducing payment-method steering for baskets above Rs 2,000.
- Map UPI P2M payment volume by merchant category, ticket band, payment service provider, and whether each flow is covered by the MDR rule.
- Model effective MDR as a percentage of basket value, including the Rs 300 cap, and identify categories where margin impact exceeds existing payment-cost buffers.
- Review acquiring and payment-aggregator contracts for MDR pass-through language, settlement fees, and routing flexibility before the October 15, 2026 effective date.
- Prepare high-ticket checkout experiments: alternative payment prompts, bank-transfer options, EMI offers, and revised promotion economics without imposing opaque customer surcharges.
- Update merchant profitability dashboards to distinguish UPI-driven sales growth from incremental payment-acceptance expense.