UPI MDR begins above ₹2,000 from Oct 15; transaction limits remain separate
A 0.4% MDR, capped at ₹300, will apply to specified UPI merchant payments above ₹2,000 from October 15, 2026. The fee threshold is separate from UPI transaction limits, which generally range from ₹1 lakh to ₹5 lakh.
What happened
UPI’s new MDR framework applies 0.4% fees, capped at ₹300, on specified merchant payments above ₹2,000 from October 15, 2026. The threshold is distinct from
Key facts
- ₹2,000 MDR threshold
- 0.4% MDR rate
- ₹300 MDR cap
- ₹5 MDR for specified sectors
- 0.02% capital-markets MDR
- ₹1 lakh to ₹5 lakh UPI transaction limits
Why this matters
Evaluate partnerships and pricing opportunities around higher-ticket UPI acceptance, targeting merchants that need cost-management tools after the ₹2,000 MDR threshold takes effect.
What to watch
- NPCI, RBI or government clarification on covered merchant categories, payer/payee eligibility and whether the ₹2,000 threshold applies per transaction, invoice or day.
- Acquirer and payment-gateway pricing circulars showing effective MDR after gateway fees, GST and enterprise-volume discounts.
- Evidence of UPI payment splitting, greater use of cards/EMI, or a decline in UPI share for ₹2,000-plus retail baskets after October 15.
- Consumer-protection enforcement or public backlash against merchant surcharging and payment-method discrimination.
- Changes in UPI transaction-limit rules, which are operationally separate but may be miscommunicated alongside the MDR change.
- Large retail, marketplace and quick-commerce announcements on whether they will absorb or pass through the cost.
- Audit UPI transaction mix by ticket size, merchant category, margin band and payment aggregator to quantify exposure above ₹2,000.
- Model checkout-level economics against card MDR, EMI/subvention, cash handling and bank-transfer alternatives; identify categories where UPI remains the lowest-cost conversion option.
- Review merchant terms and acquirer contracts for MDR pass-through, threshold treatment, GST treatment, refunds and split-payment handling.
- Prepare compliant customer messaging and frontline guidance to avoid implying that UPI transaction limits have changed.
- Test targeted incentives for high-value UPI payments only where incremental conversion or reduced cash-on-delivery costs exceed the new MDR.
- Monitor competitor checkout behavior for UPI surcharges, payment-method steering, minimum-order changes and promotional offsets.