UPI merchant MDR to apply on select payments above ₹2,000 from October 15
Business Today reports that regular P2M UPI payments above ₹2,000 will attract 0.4% MDR, capped at ₹300. Small P2PM merchants with monthly receipts up to ₹1 lakh remain exempt, while utility, fuel and capital-market transactions get concessional rates.
What happened
UPI will introduce merchant MDR on select P2M payments from October 15. Regular transactions above ₹2,000 face a 0.4% charge, while small merchants remain
Key facts
- 0.4% MDR on regular P2M UPI payments above ₹2,000
- ₹300 MDR cap for transactions of ₹75,000 and above
- 0% MDR for P2M payments up to ₹2,000
- Small P2PM merchants receiving up to ₹1 lakh monthly remain exempt
- ₹5 flat MDR for specified railways, telecom, insurance, fuel and utility payments above ₹2,000
- 0.02% MDR, capped at ₹300, for capital-market payments
Why this matters
Payment processors, acquirers and merchant-software providers may become more attractive partners or targets as merchants seek routing, reconciliation and cost-optimization tools for newly chargeable UPI flows.
What to watch
- Official NPCI, RBI, or government notification confirming the October 15 effective date, eligible transaction definitions, and treatment of QR versus app-based P2M flows.
- Clarification of whether the ₹2,000 threshold applies per transaction, aggregate customer spend, invoice value, or settlement amount.
- Merchant-category-code guidance for utilities, fuel, capital-market transactions, marketplaces, aggregators, and franchise networks.
- Payment aggregator and bank announcements on MDR allocation, merchant pricing, settlement terms, and incentive changes.
- UPI transaction-volume and average-ticket-size trends above ₹2,000 after implementation.
- Public merchant association lobbying, legal challenges, or reports of surcharging and consumer payment-method switching.
- Competitor pricing actions in high-ticket retail categories and any increase in card or EMI conversion rates.
- Segment UPI payment data by ticket size, merchant category, and customer cohort to quantify exposure above ₹2,000.
- Model margin impact assuming merchant absorption, partial pass-through, and payment-method migration; prioritize high-AOV categories such as electronics, travel, fashion, and premium grocery.
- Prepare checkout and merchant-communication options that disclose any surcharge only where legally permitted and commercially viable.
- Negotiate MDR-sharing, incentive, or volume-rebate arrangements with payment aggregators, banks, and UPI PSPs.
- Increase promotion of lower-cost alternatives for large tickets, including bank transfer, private-label financing, EMI, and loyalty-linked payment methods.
- Monitor whether competitors add UPI surcharges, alter free-delivery thresholds, or offer payment-method-specific discounts.