RBI backs 0.4% MDR on UPI merchant payments above ₹2,000 from October 15
UPI users will continue to pay no fees, while merchants face a 0.4% MDR on transactions above ₹2,000, capped at ₹300. Sub-₹2,000 payments and small merchants earning up to ₹1 lakh a month through UPI QR codes remain exempt.
What happened
RBI backed 0.4% MDR on merchant UPI payments above ₹2,000, ending zero-MDR for large transactions. Users remain exempt, while small merchants and sub-₹2,000
Key facts
- 0.4% MDR on UPI merchant payments above ₹2,000
- MDR capped at ₹300 for payments of ₹75,000 and above
- P2M UPI transactions below ₹2,000 remain free for merchants
- Small merchants earning up to ₹1 lakh monthly via UPI QR codes are exempt
- 96% of merchant transactions expected to be unaffected
- 37% of UPI volume and 70% of UPI value are P2P transfers
- 20% of MDR pool earmarked for small-merchant UPI expansion
- ₹5 flat fee for railways, telecom and fuel
- 0.02% MDR for capital-market payments
Why this matters
Prioritize partnerships or acquisitions in payment orchestration, smart routing, and merchant-financing platforms that can help retailers manage UPI MDR costs and optimize tender choice at checkout.
What to watch
- Final RBI circular language on whether multiple payments for one invoice must be aggregated for the ₹2,000 threshold.
- Clarification on merchant definition, monthly ₹1 lakh exemption calculation, franchise treatment, marketplace seller treatment and multi-store QR aggregation.
- Whether merchants may offer tender-specific discounts or recover MDR through convenience, delivery or handling fees.
- Acquirer and payment-gateway announcements on MDR pass-through, settlement pricing, QR upgrades and compliance monitoring.
- UPI transaction-value mix above ₹2,000 after October 15, including shifts to cards, EMI, cash on delivery and bank-transfer rails.
- Competitive response from large marketplaces, electronics chains, food/grocery platforms and payment apps.
- Any political or industry backlash that leads to delayed implementation, lower MDR, broader exemptions or restoration of zero MDR.
- Model blended payment-cost exposure by store format, category, average order value and UPI share; isolate transactions above ₹2,000 and estimate the impact after the ₹300 cap.
- Renegotiate acquiring, payment-gateway and card MDR rates before October 15, using UPI economics as leverage for a broader tender-cost reset.
- Redesign checkout messaging and offers to steer high-value baskets toward the lowest net-cost payment methods without charging UPI users directly.
- Review whether installment, wallet, store-credit, gift-card and loyalty-payment options can lower tender costs on electronics, premium fashion and large grocery baskets.
- Audit QR-code and legal-entity structures, especially marketplaces, franchisees and seller networks, to ensure exemption eligibility is not being used as an artificial routing mechanism.
- Prepare customer-service and cashier guidance to prevent illegal or reputationally damaging explicit UPI surcharges.