NSE CEO flags short-term UPI payment volume impact from MDR charges
A 0.4% MDR on UPI merchant payments above Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above, could temporarily curb payment volumes before normalising, according to NSE CEO Ashishkumar Chauhan.
What happened
The government introduced 0.4% MDR on UPI merchant payments above Rs 2,000, capped at Rs 300 for payments of Rs 75,000 and above. NSE CEO Ashishkumar Chauhan
Key facts
- Rs 2,000
- 0.4%
- Rs 300
- Rs 75,000
- January 2020
Why this matters
The MDR shift could open partnership opportunities with payment providers and merchant-acquiring platforms that can offset acceptance costs through bundled services, loyalty tools, or settlement solutions.
What to watch
- Formal implementation date, covered transaction definitions, exemptions, and whether MDR applies to all merchant classes or only specified entities.
- NPCI, RBI, finance ministry, and payment-industry clarification on pass-through, surcharge, and merchant-discount treatment.
- UPI merchant-payment volume and value trends above the Rs 2,000 threshold versus sub-Rs 2,000 payments.
- Spikes in transactions clustered just below Rs 2,000, split-payment incidence, cash withdrawals, or card authorization volumes.
- Large retailer and marketplace responses on fee absorption, consumer surcharges, minimum-payment thresholds, or changes to UPI acceptance.
- Merchant-acquirer pricing changes, incentive withdrawals, and bank/fintech subsidy announcements.
- Audit UPI transaction mix above Rs 2,000 by category, store format, merchant size, and average basket value.
- Model merchant-margin exposure after MDR, including whether absorbing the fee is cheaper than lost conversion or cash-handling costs.
- Prepare compliant customer communication and POS flows; avoid informal surcharge practices that could trigger regulatory or network scrutiny.
- Offer routing options for high-ticket transactions, including cards, pay-by-bank, installment products, and invoice-linked bank transfers.
- Monitor merchant churn and acceptance rates among small and mid-sized retailers, where fee sensitivity will be highest.
- Use targeted merchant incentives or fee offsets for strategic categories until post-implementation payment behavior stabilizes.