RBI to levy 0.4% MDR on merchant UPI payments above Rs 2,000 from October 15
Merchant UPI transactions above Rs 2,000 will attract a 0.4% merchant discount rate from October 15, while consumers and smaller merchant payments remain exempt. RBI says the move is intended to support payment infrastructure investment and UPI’s long-term sustainability.
What happened
India will levy 0.4% MDR on merchant UPI transactions above Rs 2,000 from October 15. Consumers remain exempt, while smaller merchant payments stay free; RBI
Key facts
- 0.4% MDR
- Rs 2,000 transaction threshold
- October 15 implementation
- 11 countries accepting UPI
- Rs 314 lakh crore transaction value in FY26
What changed
India will levy 0.4% MDR on merchant UPI transactions above Rs 2,000 from October 15. Consumers remain exempt, while smaller merchant payments stay free; RBI says the change will fund payment infrastructure and wider acceptance.
Why this matters
Retailers processing UPI payments above Rs 2,000 should prepare for a 0.4% acceptance cost from October 15 by reviewing margins, payment-routing rules, and merchant fee communications.
What to watch
- RBI clarification on whether merchants may pass MDR directly to consumers or impose UPI-specific fees.
- Whether the Rs 2,000 threshold applies per transaction, per invoice, per merchant-day total, and how refunds or split tenders are treated.
- Acquirer and PSP pricing announcements, especially whether 0.4% is passed through fully or discounted for enterprise merchants.
- Large retail and ecommerce responses, including changes to UPI incentives, card promotions, cash-on-delivery offers, and checkout design.
- UPI transaction-value mix above Rs 2,000 after implementation; a drop in high-value UPI share would indicate meaningful tender substitution.