NPCI to introduce MDR on select UPI merchant payments above ₹2,000 from October 15

Select P2M UPI payments above ₹2,000 will carry a ₹5 flat fee or 0.4% MDR, capped at ₹300, while most low-value UPI transactions remain free. The rates remain below typical credit-card merchant charges, creating a new checkout-cost consideration for retailers.

— Source publishedWed, 16 Sept, 2026, 07:56 IST·First seen Wed, 16 Sept, 2026, 07:58 IST·Source Mint · Money

What happened

National Payments Corporation of India (NPCI) · NPCI will introduce MDR on select merchant UPI payments above ₹2,000 from October 15, while retaining free

Key facts

  • Effective October 15
  • 95% of low-value UPI transactions below ₹2,000 remain free
  • ₹5 flat MDR for select transactions above ₹2,000
  • 0.4% MDR for other P2M UPI transactions above ₹2,000
  • ₹300 maximum MDR per transaction
  • 0.02% MDR for capital-market UPI payments
  • Credit-card MDR typically 1.5%-2.5%
  • Debit-card MDR capped at 0.90%
  • UPI and RuPay debit-card MDR has been nil since 2020

Why this matters

Payments, POS, and merchant-acquiring platforms may gain new revenue-pool and partnership opportunities by helping retailers optimize UPI-versus-card acceptance costs for higher-value transactions.

What to watch

  • NPCI circular clarifying merchant categories, transaction exclusions, fee collection mechanics, GST treatment, and whether the threshold applies per transaction or aggregate value.
  • Payment aggregator announcements on whether MDR is absorbed, passed through, bundled, or supplemented with platform fees.
  • Merchant association responses and any government or RBI commentary on UPI zero-MDR policy.
  • Changes in high-ticket UPI authorization success rates, abandonment, payment-method mix, and average order value after October 15.
  • Card networks and issuers increasing merchant-funded offers or revising MDR-linked commercial terms.
  • Evidence of checkout splitting or other consumer behavior intended to remain below the ₹2,000 threshold.
  • Model the blended payment-cost impact by ticket band, UPI share, category, and store versus online channel.
  • Review whether checkout terms permit passing MDR-related costs to customers; avoid visible surcharges unless legally permitted and competitively viable.
  • Ask payment aggregators for post-October pricing, settlement, routing, reconciliation, and transaction-category treatment.
  • Prioritize UPI acceptance for sub-₹2,000 baskets while testing payment-method messaging for higher-ticket purchases.
  • Renegotiate card and gateway rates using UPI's still-lower MDR as leverage, particularly for high-value categories.
  • Update promotion economics: issuer-funded card offers may become relatively more attractive where UPI incentives are no longer costless.

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