NPCI to levy capped MDR on select UPI merchant payments above ₹2,000 from October 15
Eligible P2M UPI transactions above ₹2,000 will attract 0.4% MDR, capped at ₹300. Small P2PM merchants receiving up to ₹1 lakh a month remain exempt, while railways, telecom, insurance, fuel and utilities will pay a flat ₹5 fee above the threshold.
What happened
National Payments Corporation of India (NPCI) · NPCI will introduce capped MDR on select UPI merchant payments above Rs 2,000 from October 15, 2026. Consumers
Key facts
- 0.4% MDR on eligible P2M UPI transactions above Rs 2,000
- MDR capped at Rs 300 per transaction
- P2PM small merchants receiving up to Rs 1 lakh monthly remain zero-MDR
- Specified sectors face flat Rs 5 MDR above Rs 2,000
- Debit-card MDR up to 0.90%
- Credit-card MDR typically 1.5%-2.5%
- Over 95% of UPI P2M transaction volume is up to Rs 2,000
Why this matters
Reassess partnerships with payment aggregators, banks and UPI providers around higher-ticket merchant categories, where the new MDR may shift pricing, routing economics and merchant acquisition incentives.
What to watch
- NPCI operating circular details on eligible merchant category codes, treatment of refunds, split payments, aggregators and effective enforcement.
- RBI or government commentary on merchant discount recovery, customer surcharging and the durability of zero-MDR policy for UPI.
- Changes in high-value UPI P2M share, average ticket size and merchant payment-method mix after October 15.
- Announcements by major payment aggregators, banks and retailers on revised UPI pricing or checkout routing.
- Merchant-association complaints, consumer backlash, or evidence of widespread invoice splitting.
- Whether payment apps introduce incentives, rewards or routing features to retain high-value UPI transactions.
- Model payment-cost exposure by merchant category and average UPI ticket size, with particular focus on electronics, travel, healthcare, department stores and luxury retail.
- Negotiate acquirer and payment-aggregator pricing before October 15, including blended MDR, volume rebates and routing options.
- Update checkout design to preserve UPI conversion while presenting compliant alternatives for high-value baskets, such as card offers, EMI and bank-transfer options.
- Deploy monitoring for sub-₹2,000 transaction splitting, cash-discount behavior, UPI abandonment and payment-method switching.
- Review merchant terms, receipts and staff guidance to avoid impermissible or reputationally damaging UPI surcharges.
- Assess whether the ₹5 flat-fee categories create stronger incentives for railways, utilities, telecom, fuel and insurers to redirect high-value UPI collections.