UPI MDR framework to charge select merchant payments above ₹2,000 from 15 October 2026
A proposed UPI MDR framework would levy 0.40% on select person-to-merchant payments above ₹2,000, capped at ₹300 per transaction. The charge would be borne by merchants, not customers using PhonePe, Paytm or Google Pay.
What happened
India’s new UPI MDR framework will charge select merchants 0.40% on P2M payments above ₹2,000, capped at ₹300 per transaction. Customers using PhonePe, Paytm or
Key facts
- MDR applies to select P2M UPI transactions above ₹2,000
- 0.40% MDR
- ₹3,000 transaction: ₹12 MDR
- ₹50,000 transaction: ₹200 MDR
- ₹1,00,000 transaction: calculated MDR ₹400, capped at ₹300 per transaction
Why this matters
Assess partnerships or acquisitions in payment orchestration, merchant acquiring and value-added services that can help merchants manage MDR exposure and improve economics on high-ticket UPI flows.
What to watch
- Final government, NPCI and RBI notification defining eligible merchant categories, transaction types, exemptions and enforcement.
- Whether the 15 October 2026 start date remains intact and whether MDR applies to all UPI apps and all P2M rails.
- Merchant-discount-rate pass-through behavior at national chains versus independent retailers.
- UPI share of transactions and GMV above ₹2,000 relative to credit cards, debit cards, net banking and pay-later products.
- Acquirer pricing announcements, especially bundled offers combining MDR with settlement, lending, loyalty or fraud services.
- Consumer complaints or app-level prompts related to merchant refusal, payment splitting or steering.
- Model payment-tender elasticity for baskets just above ₹2,000 and identify categories with the highest exposure, including electronics, fashion, travel, healthcare and premium grocery.
- Build checkout rules that preserve UPI convenience while offering lower-cost alternatives for eligible high-value transactions, without imposing customer-facing UPI surcharges.
- Renegotiate acquiring and payment-gateway contracts around blended MDR, transaction caps, settlement speed, refunds and fraud-loss allocation.
- Test whether targeted UPI offers for loyalty members generate enough conversion and repeat purchase to justify absorbing MDR on large baskets.
- Prepare merchant communications and store-associate guidance to avoid inconsistent steering practices that could create customer friction or regulatory risk.