NPCI to add MDR on select UPI merchant payments above ₹2,000 from October 15
Fuel, railways, telecom, insurance and agricultural-input merchants will face a flat ₹5 MDR on specified UPI payments above ₹2,000. Other eligible P2M transactions will attract 0.4%, capped at ₹300, while small merchants and transactions up to ₹2,000 remain zero-MDR.
What happened
National Payments Corporation of India (NPCI) · NPCI will introduce MDR on select large UPI merchant payments from October 15. Fuel, railways, telecom,
Key facts
- ₹5 flat MDR for specified merchant-category UPI transactions above ₹2,000
- 0.4% MDR for other P2M UPI transactions above ₹2,000
- ₹300 MDR cap for transactions of ₹75,000 and above
- Zero MDR for P2PM small merchants receiving up to ₹1 lakh per month
- UPI transactions up to ₹2,000 remain unaffected
- More than 95% of UPI P2M volume is small-value transactions
Why this matters
Payment platforms and acquirers have an opening to deepen enterprise merchant partnerships with pricing, routing and reconciliation tools tailored to newly chargeable UPI flows.
What to watch
- NPCI circular clarifications on eligible merchant categories, transaction definitions, exemptions, fee collection and treatment of split payments.
- Acquirer and payment-aggregator announcements on whether they retain part of the MDR or add separate processing charges.
- Merchant association, fuel-dealer, railway-service, telecom and insurer responses, particularly any request to defer or reverse the rule.
- Changes in UPI payment value and transaction share above ₹2,000 in affected merchant categories after October 15.
- Evidence of consumer or merchant migration to cards, direct account transfers, cash, wallets or multiple sub-₹2,000 UPI payments.
- Any regulatory indication that MDR could extend to additional merchant categories or lower transaction thresholds.
- Review merchant-category-code and QR/acquiring setup to determine which outlets and payment flows are subject to MDR from October 15.
- Model incremental acceptance cost by average UPI ticket, transaction mix above ₹2,000 and outlet category; compare against card, net-banking and cash handling costs.
- Update checkout prompts, cashier scripts and payment routing for affected high-value transactions without creating prohibited or misleading customer surcharges.
- Negotiate acquiring-bank and payment-aggregator pricing, settlement terms and reporting as intermediaries adjust to the new MDR structure.
- Track whether competitors absorb the fee, introduce minimum-payment thresholds, favor alternate rails or attempt price pass-through.