Proposed 0.4% UPI MDR above ₹2,000 puts merchant payment costs in focus
Traders are urging the government to withdraw a proposed 0.4% MDR on eligible person-to-merchant UPI payments above ₹2,000, slated for 15 October. The proposal caps the fee at ₹300, exempts small merchants receiving up to ₹1 lakh monthly via UPI QR, and faces GST Council discussion on 7 October.
What happened
Indian traders urged the government to withdraw a proposed 0.4% MDR on eligible UPI merchant payments above Rs 2,000. The charge, due from 15 October, could
Key facts
- 0.4% MDR on eligible person-to-merchant UPI payments above Rs 2,000
- MDR capped at Rs 300 per transaction
- Effective date proposed: 15 October
- Small merchants receiving up to Rs 1 lakh monthly via UPI QR exempt
- GST Council discussion scheduled for 7 October; MDR GST rate cited at 18%
What changed
Indian traders urged the government to withdraw a proposed 0.4% MDR on eligible UPI merchant payments above Rs 2,000. The charge, due from 15 October, could raise payment-acceptance costs for larger retailers and alter high-value UPI usage.
Why this matters
Model the proposed 0.4% UPI MDR on transactions above ₹2,000 into checkout economics, payment-routing rules, and merchant-margin exposure ahead of the 15 October target date.
What to watch
- GST Council outcome on 7 October, including whether MDR treatment is approved, deferred or referred for further consultation.
- Final notification language on effective date, merchant-size test, monthly ₹1 lakh exemption calculation and transaction-type exclusions.
- Whether MDR is charged to merchants, absorbed by acquiring banks/PSPs, subsidized by government, or partly offset through interchange changes.
- Large retail and e-commerce responses: payment-method incentives, reduced UPI promotions, minimum-ticket thresholds or increased card/EMI marketing.
- UPI transaction mix changes above ₹2,000, especially substitution toward credit cards, RuPay credit on UPI, net banking and cash-on-delivery.