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UPI MDR can't be passed on to shoppers, says Punjab & Sind Bank MD; customers pay only the posted price
UPI payments to merchants above Rs 2,000 will attract a 0.4 per cent MDR from October 15, capped at Rs 300, and Punjab & Sind Bank's MD says merchants cannot pass it on to customers. Transactions up to Rs 2,000, over 95 per cent of P2M volume, are unaffected.
The numbers
Figures from Moneycontrol
| Flat MDR for railways, telecom, insurance, fuel above Rs 2,000: | Rs 5 per transaction |
|---|
Why it matters to operators and investors
Because merchants must absorb the MDR and can't pass it on, expect more demand for tools that offset the cost, such as payment-mix optimisation, cards and EMI, and loyalty, which makes acquirers and POS or payments-tech assets with a high-ticket merchant base more attractive targets ahead of the Oct 15, 2026 start.
What to watch next
- Any circular or FAQ from the regulator or NPCI on surcharging or the Rs 2,000 threshold
- Merchant association statements asking for a revised cap or a delayed start
- Retailer or aggregator notices of repriced acquiring terms before Oct 15, 2026
- Consumer complaints of UPI-specific surcharges or 'cash discount' offers at checkout
- UPI P2M volume mix shifting toward bills at or just under Rs 2,000 after go-live
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Large-ticket merchants (electronics, jewellery, appliances and similar) are likely to lobby for a higher threshold or a lower cap, since the Rs 300 ceiling bites hardest on big baskets.
- Banks and payment aggregators are likely to send merchants repriced acquiring terms and MDR notices ahead of Oct 15, 2026.
- Some retailers may nudge shoppers toward cash, cards or sub-Rs 2,000 split payments on larger bills, rather than add an explicit UPI surcharge.
- Regulators and bank executives are likely to keep repeating that customers pay only the posted price, and may issue clarifications on surcharging.
- Railways, telecom, insurance and fuel operators are likely to treat the flat Rs 5 above Rs 2,000 as manageable and make little change to their checkout flows.