UPI MDR framework keeps low-value and small-merchant payments shielded
India’s UPI MDR framework retains zero charges for P2P transfers and protects merchant payments up to ₹2,000, alongside eligible small merchants. Specified higher-value P2M transactions may attract MDR, though 96% of merchant transactions are expected to remain unaffected.
What happened
India’s new UPI MDR framework keeps all P2P payments free and shields most merchant transactions. MDR applies to specified higher-value P2M payments, while
Key facts
- 0% MDR for P2P UPI transactions
- ₹2,000 P2M MDR-free threshold
- ₹1 lakh monthly QR-code receipts protected for eligible small merchants
- 0.4% MDR on specified P2M transactions above ₹2,000
- ₹300 maximum MDR cap for transactions of ₹75,000 and above
- ₹5 flat MDR for qualifying essential-sector transactions above ₹2,000
- 0.02% MDR for capital-market transactions, capped at ₹300
- 4% of merchant transactions expected to incur MDR
- 96% of merchant transactions expected to remain unaffected
- 5% of MDR collections allocated to a small-merchant UPI adoption fund
Why this matters
Payments platforms and acquirers may find partnership and pricing opportunities in higher-value P2M flows, but the addressable fee pool is constrained by broad exemptions.
What to watch
- Final RBI, NPCI, and government definitions of eligible small merchants, chargeable P2M categories, thresholds, and MDR caps.
- Whether the ₹2,000 threshold applies per transaction, merchant category, or other transaction conditions.
- Acquirer and PSP pricing announcements for higher-value UPI transactions.
- Evidence of checkout steering, minimum-ticket policies, or discounts for alternate payment methods at large retailers.
- Changes in UPI share of high-ticket purchases in electronics, jewelry, fashion, travel, and omnichannel chains.
- Merchant complaints or enforcement actions related to misclassification of protected transactions.
- Retailers should map UPI transaction mix by ticket size, merchant entity, category, and acquiring partner to estimate exposure above the protected threshold.
- Large-format and premium retailers should prepare checkout-routing and customer messaging options before implementation details are finalized.
- Small retailers should verify eligibility status and ensure acquirers do not apply MDR to protected transactions.
- Payment providers should develop transparent merchant dashboards showing transaction classification, applicable MDR, and dispute processes.
- Retail finance teams should reassess payment acceptance costs against card MDR, EMI subsidies, wallet incentives, and cash-handling costs for high-ticket categories.