UPI MDR from 15 October puts merchant surcharge practices under scrutiny
A 0.4% UPI MDR is set to apply on eligible merchant payments above ₹2,000 from 15 October. Experts cited by Mint say merchants cannot separately pass the fee to customers under NPCI rules, though the legal position for transactions above the threshold remains contested.
What happened
UPI MDR of 0.4% is set to apply on eligible P2M transactions above ₹2,000 from 15 October. Experts say merchants cannot separately surcharge customers under
Key facts
- 0.4% MDR
- ₹2,000 transaction threshold
- 15 October
- Section 10A of the Payment and Settlement Systems Act, 2007
Why this matters
Assess payment-partner contracts and target-company exposure to high-value UPI transactions, including whether MDR costs can be mitigated through pricing, routing, or commercial terms.
What to watch
- Formal NPCI, RBI, or government clarification on MDR applicability and merchant pass-through rules.
- Payment aggregator or bank circulars specifying eligible merchant categories, thresholds, and implementation mechanics.
- Consumer complaints, enforcement notices, or litigation involving convenience fees on UPI transactions above ₹2,000.
- Changes in high-ticket UPI payment volumes, split-payment behavior, and card or EMI mix at large retailers.
- MDR subsidy, rebate, or merchant-incentive announcements from banks, fintechs, or major UPI apps.
- Model MDR exposure by store, merchant category, ticket size, and UPI share above ₹2,000.
- Audit POS, QR, checkout, invoice, and marketplace seller flows for any explicit or disguised UPI surcharge risk.
- Prepare compliant margin-offset options: assortment pricing, promotional changes, loyalty incentives, and payment-method-neutral service pricing.
- Engage acquiring banks and payment aggregators on MDR applicability, settlement reporting, waiver programs, and dispute handling.
- Train store and customer-support teams to avoid directing customers toward prohibited surcharge practices.