RBI, FinMin ask banks to ensure ATM cash as UPI MDR begins on select merchant payments

Banks have been asked to maintain ATM cash availability from 15 October, when a 0.4% MDR applies to specified P2M UPI payments above ₹2,000. Authorities expect a short-term shift toward cash as merchants and consumers adjust.

— Source publishedWed, 23 Sept, 2026, 05:31 IST·First seen Wed, 23 Sept, 2026, 05:38 IST·Source Mint · Industry

What happened

RBI and finance ministry asked banks to ensure ATM cash availability from 15 October as 0.4% MDR begins on select higher-value UPI merchant payments.

Key facts

  • 0.4% MDR on specified P2M UPI transactions above ₹2,000
  • MDR capped at ₹300 for transactions of ₹75,000 and above
  • 96% of P2M UPI volume is below ₹2,000
  • 251,057 ATMs at end-March 2025
  • UPI processed 2,451 crore transactions worth ₹29.82 trillion in August

Why this matters

Assess partnerships or acquisitions in cash-management, ATM servicing, and multi-rail payment orchestration as the policy change exposes demand for smoother merchant acceptance and transaction-cost optimization.

What to watch

  • ATM withdrawal value and frequency from 15 October versus pre-change baselines, especially near ₹2,000-plus purchase corridors.
  • UPI P2M volume, value, average ticket size and share of transactions clustered just below ₹2,000.
  • Merchant acceptance changes: cash-only prompts, surcharge attempts, payment splitting or reduced QR prominence.
  • ATM cash-out incidents, replenishment costs and RBI/bank advisories on currency availability.
  • MDR pass-through rates by merchant category and statements from merchant associations, banks and payment networks.
  • Any clarification on covered merchant categories, exemptions, enforcement or duration of the MDR regime.
  • Banks increase ATM cash forecasting, branch-to-ATM logistics and monitoring in high-footfall retail, transit and wholesale clusters.
  • Merchants add payment-choice prompts, minimum-ticket guidance and cash-management controls at checkout.
  • Acquirers and PSPs update MDR disclosure, merchant settlement reporting and dispute/support scripts.
  • Retailers review basket-level conversion, tender mix, transaction splitting and cash shrink exposure by store format.
  • Fintechs promote linked-card, wallet, credit and pay-later alternatives for higher-value purchases where economics remain favorable.