NPCI to levy 0.4% MDR on merchant UPI payments above Rs 2,000 from Oct 15
Merchant UPI transactions above Rs 2,000 will attract 0.4% MDR, capped at Rs 300, from October 15. Consumers, payments up to Rs 2,000 and qualifying micro merchants remain exempt, while select utility and essential-service categories get concessional fees.
What happened
NPCI will levy 0.4% MDR on merchant UPI payments above Rs 2,000 from October 15, while consumers and qualifying micro merchants remain exempt. The move raises
Key facts
- 0.4% MDR on P2M UPI payments above Rs 2,000
- Effective October 15
- MDR capped at Rs 300 for transactions of Rs 75,000 and above
- Payments up to Rs 2,000 exempt
- Micro-merchant exemption up to Rs 1 lakh monthly UPI receipts
- Rs 5 flat fee for eligible railways, telecom, insurance, fuel and utility payments above Rs 2,000
- 0.02% MDR for capital-market transactions, capped at Rs 300
- 2,451 crore UPI transactions worth Rs 29.9 lakh crore in August 2026
Why this matters
Prioritize partnerships or acquisitions in payment orchestration, merchant analytics and lower-cost acceptance solutions as retailers seek to manage newly introduced UPI costs on larger transactions.
What to watch
- NPCI circular details on merchant-category codes, qualifying micro-merchant definitions, settlement mechanics and whether the Rs 300 cap applies per transaction.
- RBI or government response on merchant pass-through, discount withdrawal and disclosure requirements.
- PSP/acquirer pricing changes, including whether they add fees above the stated MDR or offer enterprise offsets.
- UPI payment-mix changes for tickets above Rs 2,000, including split tender behavior and migration to cards, EMI and cash.
- Competitor policies on absorbing MDR, imposing convenience fees or offering alternate-payment incentives.
- Merchant disputes over category classification, especially utilities and essential services.
- Quantify UPI transaction value, ticket-size distribution and MDR exposure by store format, category and merchant entity.
- Reconfigure checkout routing to surface lowest-cost tender options for transactions above Rs 2,000 without creating prohibited or confusing surcharges.
- Renegotiate acquiring, PSP and bank contracts for tiered MDR, caps, refunds, chargeback treatment and enterprise-volume concessions.
- Review promotions and loyalty funding: preserve UPI incentives for sub-Rs-2,000 baskets and shift large-ticket offers toward cards, EMI or bank-funded schemes.
- Audit micro-merchant and essential-service eligibility to ensure exempt locations and categories are correctly coded.
- Prepare customer-facing payment messaging and frontline scripts before October 15 to minimize abandonment and complaints.