Proposed UPI MDR framework targets 0.4% fee on eligible payments above ₹2,000
An industry-backed campaign says a proposed UPI MDR framework would keep consumer, P2P, AutoPay and small-merchant transactions free, while levying 0.4% on eligible merchant payments above ₹2,000. Implementation timing and policy status remain unspecified.
What happened
An industry-backed advertisement says proposed UPI MDR would remain zero for consumers, small merchants, person-to-person transfers and AutoPay, while applying
Key facts
- 0.4% MDR
- payments above ₹2,000
- zero MDR for merchants receiving up to ₹1 lakh per month
- 96% of transactions unaffected
Why this matters
Assess partnerships with payment processors and enterprise merchants that could benefit from new UPI revenue pools, while avoiding commitments until the framework’s final rules are clear.
What to watch
- NPCI, RBI, Ministry of Finance, or government notification formally defining eligible merchant payments, transaction thresholds, and effective dates.
- Clarification on whether the 0.4% is paid by merchants, acquirers, banks, or subsidized through government reimbursement.
- Exemption treatment for essential goods, small businesses, QR-only merchants, online marketplaces, and recurring AutoPay transactions.
- Merchant associations' response and evidence of large retailers adding payment surcharges or minimum-order thresholds.
- Changes in UPI transaction mix above ₹2,000, card-routing behavior, and acquirer pricing announcements.
- Model a 40 bps cost exposure on UPI merchant transactions above ₹2,000, segmented by average ticket size, category, and online versus store payments.
- Review payment-acquirer contracts for MDR pass-through clauses, volume rebates, and the ability to route high-value UPI transactions differently.
- Prepare checkout and POS rules to offer transparent payment-choice messaging without introducing prohibited or reputationally risky UPI surcharges.
- Assess whether high-AOV categories can shift some demand toward credit cards, co-branded cards, EMI, wallets, or bank transfer rails if net acceptance costs differ.
- Use any new fee burden as leverage in acquiring-rate negotiations, especially for omnichannel retailers with large transaction volumes.