Reported UPI MDR plan would charge merchants 0.4% on payments above ₹2,000 from Oct. 15
The reported proposal would levy a 0.4% merchant discount rate on UPI merchant transactions above ₹2,000, with fees capped at ₹300. It could raise acceptance costs for retailers while leaving consumer checkout flows unchanged.
What happened
RBI Deputy Governor Shirish Chandra Murmu said a 0.4% MDR on UPI merchant payments above Rs 2,000 from October 15 is unlikely to drive merchants or consumers
Key facts
- 0.4% MDR
- Rs 2,000 transaction threshold
- Rs 300 fee cap
- Rs 75,000 cap threshold
- more than 600 RBI circulars
- around 11 regulated-entity categories
Why this matters
Payments, POS, and merchant-acquiring platforms may gain demand for routing, surcharge-compliance, and transaction-optimization tools if higher-value UPI acceptance becomes fee-bearing.
What to watch
- Official NPCI, RBI, Ministry of Finance, or gazette notification confirming whether the proposal is active policy.
- Final definition of covered merchant transactions, including whether the ₹2,000 threshold applies per transaction, per day, or by merchant category.
- Exemptions for small merchants, MSMEs, essential categories, education, healthcare, fuel, government payments, or QR-based acceptance.
- Clarification of who bears the MDR across merchant, acquirer, issuer, payment aggregator, and platform participants.
- Bank and payment-aggregator changes to merchant pricing, settlement terms, QR acceptance conditions, or promotional funding.
- Merchant association response and evidence of payment-method steering, order-value bunching below ₹2,000, or reduced UPI promotions.
- Consumer behavior shifts toward cards, credit-on-UPI, EMI, cash-on-delivery, or transaction splitting for larger baskets.
- Model net margin exposure by category, average order value, UPI share, and transaction bands just above ₹2,000.
- Audit checkout and POS capabilities to identify whether payment incentives, tender steering, or transaction-splitting controls can be deployed without harming conversion or compliance.
- Renegotiate acquiring and payment-service-provider contracts, including blended pricing, volume rebates, and routing options across UPI, cards, EMI, and bank-transfer rails.
- Review pricing, promotion, and minimum-order policies for high-value purchases; avoid explicit consumer surcharges unless regulations clearly permit them.
- Prepare supplier and marketplace discussions where merchant-funded payment costs may need to be reflected in commissions, seller fees, or category economics.
- Segment small-format and franchise stores from large-format operations, since exposure and potential exemptions may differ materially.