NPCI to levy MDR on select UPI merchant payments above ₹2,000 from October 15
NPCI expects transaction volumes to hold as about 96% of P2M UPI payments remain exempt. The 0.4% MDR, capped at ₹300, will apply to specified higher-value merchant transactions and fund acceptance infrastructure, soundboxes and new payment tools.
What happened
National Payments Corporation of India (NPCI) · NPCI says the new UPI MDR regime starting October 15 should not materially reduce payment volumes. Charges apply
Key facts
- 0.4% MDR on specified P2M UPI transactions above ₹2,000
- MDR capped at ₹300 for transactions of ₹75,000 and above
- P2P and P2M payments up to ₹2,000 exempt
- About 96% of P2M transactions expected to remain unaffected
- ₹5 flat MDR for certain essential and thin-margin sectors on payments above ₹2,000
- 0.02% MDR on capital-market transactions, capped at ₹300
- 20 million merchants have soundboxes
- 40 million merchants have QR codes but no soundboxes
Why this matters
Payments, POS and soundbox platforms gain a stronger case for merchant-acquiring partnerships and consolidation around high-value UPI acceptance capabilities.
What to watch
- NPCI circular defining eligible merchant categories, treatment of aggregators and whether the ₹2,000 threshold applies per transaction or per order.
- Merchant discount rate incidence: whether acquirers, banks, apps or merchants retain the fee and how the ₹300 cap is operationalized.
- UPI P2M ticket-size distribution and any increase in payments clustering just below ₹2,000 after October 15.
- Payment-method mix changes in electronics, jewellery, hospitals, travel, fuel and organised retail.
- Merchant association complaints, government statements and any subsidy or reimbursement mechanism for UPI acceptance infrastructure.
- Soundbox deployment, QR expansion and acquirer investment trends following implementation.
- Payment aggregators and acquirers will reprice enterprise merchant contracts and clarify which merchant category codes and transaction types are in scope.
- Large merchants will update checkout routing, POS prompts and staff guidance for UPI transactions above ₹2,000.
- Banks, fintechs and soundbox providers will position upgraded acceptance devices, reconciliation tools and credit products around the new MDR-funded economics.
- Retailers with low margins will test minimum purchase thresholds, payment-method incentives and transaction-splitting behavior.
- Card networks and issuers may target high-ticket retail categories where UPI's cost advantage narrows.