UPI MDR above Rs 2,000 to be borne by payment operators, Sitharaman says

Finance Minister Nirmala Sitharaman said consumers will not bear UPI MDR under NPCI’s new Person-to-Merchant framework. The 0.4% fee on transactions above Rs 2,000, capped at Rs 300, shifts attention to payment-operator economics while leaving an estimated 96% of P2M payments unaffected.

— Source publishedTue, 22 Sept, 2026, 08:26 IST·First seen Tue, 22 Sept, 2026, 08:35 IST·Source Times of India · Business

What happened

Finance Minister Nirmala Sitharaman said UPI MDR charges will be borne by payment operators, not consumers. NPCI’s framework levies 0.4% on P2M transactions

Key facts

  • 0.4% MDR on Person-to-Merchant UPI transactions above Rs 2,000
  • Rs 300 maximum MDR per transaction
  • Transactions below Rs 2,000 exempt
  • Around 96% of P2M transactions expected to remain unaffected
  • NPCI introduced the framework on September 15

Why this matters

Fintechs and payment platforms may seek bank, merchant-acquirer and scale partnerships to offset MDR absorption costs and monetize higher-value merchant flows.

What to watch

  • Final NPCI circular defining which entity bears MDR, eligible transaction types and implementation date.
  • Operator announcements on merchant incentives, settlement charges, service tiers or changes to cashback funding.
  • UPI P2M transaction volume and value trends specifically for tickets above Rs 2,000.
  • Changes in card, wallet and EMI share at high-ticket retail merchants.
  • Government subsidy, reimbursement or budget language addressing UPI infrastructure economics.
  • Merchant complaints over acceptance costs, settlement delays or payment-routing restrictions.
  • Payment operators will segment merchants by average ticket size and reduce incentives on transactions above Rs 2,000.
  • Large retailers and marketplaces will test checkout nudges toward cards, EMI, wallets, bank transfer and prepaid instruments where economics are more favorable.
  • Acquirers and fintechs will bundle payment acceptance with POS software, reconciliation, credit, loyalty and faster-settlement tiers.
  • Retailers with high-value baskets, including electronics, travel, jewellery, furniture and healthcare, will seek clarity on whether operator absorption affects settlement terms or promotional funding.
  • Banks and PSPs will intensify efforts to monetize UPI users through credit-on-UPI, merchant lending and transaction-data-driven offers.