RBI says no decision yet on merchant discount rates for select UPI payments
RBI Governor Sanjay Malhotra said no decision has been taken on introducing merchant discount rates for select UPI transactions. Proposed legal changes could lift restrictions on charging MDR for notified electronic payment modes, potentially affecting merchant payment costs.
What happened
RBI Governor Sanjay Malhotra said no decision has been made on introducing merchant discount rates for select UPI payments. Proposed legal amendments could
Why this matters
Evaluate payments partnerships and acquisition targets against multiple MDR scenarios, since regulatory flexibility could reshape UPI revenue pools and merchant-value propositions.
What to watch
- Final text and parliamentary progress of proposed legal amendments affecting MDR restrictions.
- RBI consultation paper, board decision, circular or notification specifying eligible payment modes, merchant categories and transaction thresholds.
- Government budget allocations or subsidy changes for UPI/payment infrastructure.
- Statements from NPCI, banks, payment aggregators and large merchant associations on cost recovery.
- Growth in credit-on-UPI and high-value UPI transactions, which are the most plausible initial targets for monetization.
- Any evidence of merchant cash-steering, minimum-ticket policies or reduced QR-code acceptance following policy clarification.
- Model payment-acceptance costs by store format, transaction size and UPI share, with separate cases for zero MDR, 10-20 bps selective MDR and broader MDR.
- Review acquiring-bank and payment-aggregator contracts for pass-through clauses, pricing-reset rights and settlement-fee exposure.
- Increase customer payment-mix reporting, separating UPI, cards, wallets, cash and credit-on-UPI where possible.
- Prepare merchant communications and checkout policies that preserve UPI adoption while avoiding unlawful payment surcharges.
- Monitor whether large retail peers negotiate enterprise MDR caps or shift volume toward proprietary wallets, co-branded cards and bank-account payment options.