RBI says no decision yet on MDR for UPI merchant payments
UPI merchant payments remain free for now, RBI Governor Sanjay Malhotra said. Any move to introduce merchant discount rates would require a separate policy decision and regulatory guidelines, even as lawmakers consider payment-law amendments.
What happened
RBI Governor Sanjay Malhotra said no decision has been made to impose MDR on UPI merchant payments. UPI remains free as lawmakers consider payment-law
Key facts
- 23.66 billion UPI transactions
- ₹29.9 lakh crore transaction value
- July 2026
Why this matters
Payments and fintech deal models can continue to assume zero UPI MDR near term, but should include contingent pricing, routing, and merchant-acquisition scenarios if policy changes.
What to watch
- Draft amendments to payment-system or banking legislation that explicitly address UPI pricing, interchange, or merchant charges.
- RBI consultation papers, payment-system directions, or governor remarks linking UPI sustainability to merchant contribution.
- Union Budget allocations or reductions in reimbursement support for UPI and RuPay payment infrastructure.
- NPCI, bank, or PSP announcements of revised merchant service, settlement, API, or reconciliation pricing.
- Any proposal distinguishing large merchants, high-value transactions, cross-border UPI, credit-on-UPI, or specific merchant categories.
- Keep UPI as a default tender and continue QR/POS rollout; no near-term pricing or checkout change is warranted.
- Model a contingent UPI acceptance-cost case for FY27-FY28, segmented by large-format, marketplace, and small-seller merchant entities.
- Review payment-provider contracts for rights to introduce platform, settlement, reconciliation, or service fees independent of MDR.
- Increase steering toward least-cost payment routing where available, while preserving UPI conversion and customer convenience.
- Prepare communications and merchant-seller policies for a possible differentiated MDR regime, especially for marketplace third-party sellers.