UPI’s proposed MDR shift puts merchant payment costs back in focus
A revised UPI framework would apply 0.4% MDR on select merchant payments above ₹2,000, capped at ₹300, while keeping smaller P2M payments free. The proposal has reopened debate on retailer costs, fintech economics and funding for digital-payments infrastructure.
What happened
India’s revised UPI framework introduces 0.4% MDR on select merchant payments above ₹2,000, triggering debate among fintech founders, brokers and policymakers
Key facts
- 0.4% MDR on select P2M UPI transactions above ₹2,000
- ₹300 MDR cap per transaction
- ₹5 flat charge for specified railway, telecom, insurance and fuel payments
- P2M payments up to ₹2,000 remain free
- 96% of transactions expected to remain free
- NPCI cash: ₹6,119 crore
- NPCI pre-tax operating profit: ₹1,900 crore
Why this matters
Fintechs and retailers may find renewed partnership opportunities in routing, loyalty and value-added payment services that offset potential MDR costs.