NPCI to levy 0.4% MDR on select UPI merchant payments above ₹2,000
NPCI’s new framework, effective October 15, will charge merchants 0.4% on select person-to-merchant UPI transactions above ₹2,000, capped at ₹300 per transaction. Consumers remain exempt, while the move has sparked disagreement over parliamentary recommendations.
What happened
National Payments Corporation of India (NPCI) · NPCI introduced an MDR framework charging 0.4% on select person-to-merchant UPI transactions above ₹2,000,
Key facts
- UPI merchant transactions above ₹2,000
- 0.4% MDR
- ₹300 maximum MDR per transaction
- March 12, 2026
- August 12, 2026
- September 15
- October 15
Why this matters
Payments, POS, and merchant-acquiring platforms may gain partnership and consolidation opportunities as retailers seek lower-cost routing, reconciliation, and value-added services for higher-value UPI transactions.
What to watch
- NPCI circular details defining 'select' merchants, covered UPI instruments, exclusions and whether the charge applies to all acquiring entities.
- Government, RBI and parliamentary responses, especially any statement reaffirming zero-MDR policy for UPI.
- Payment gateway and acquirer announcements on fee pass-through, merchant contracts and effective merchant pricing.
- UPI transaction-value mix above ₹2,000, split-payment behavior and changes in UPI versus card share in electronics, travel, jewellery and healthcare.
- Evidence of consumer-facing surcharges or merchant discounts that could attract regulatory scrutiny.
- Implementation readiness and merchant acceptance of the October 15 effective date.
- Large merchants audit UPI transaction cohorts above ₹2,000 and quantify MDR exposure by store, category and payment gateway.
- Payment aggregators introduce routing rules, merchant-specific pricing and prompts favoring cards, credit-on-UPI, bank transfer or lower-cost rails.
- Retailers revise tender policies, including selective absorption, surcharge disclosures, high-value UPI caps or loyalty incentives for alternative payment methods.
- Banks and fintechs market credit cards, RuPay credit-on-UPI and proprietary checkout products as ways to preserve higher-ticket payment economics.
- Industry bodies seek clarification on which merchant categories and transaction types are covered and press for a phased or subsidized rollout.