UPI to add MDR on select merchant payments from Oct. 15; AutoPay stays exempt
Selected UPI merchant payments above Rs 2,000 will attract category-specific MDR from Oct. 15. Regular eligible P2M transactions face 0.4% MDR, while specified insurance payments carry a Rs 5 charge. Recurring UPI AutoPay mandates, including SIPs, OTT subscriptions and utilities, remain exempt.
What happened
UPI will introduce MDR on selected merchant payments from Oct. 15. Recurring AutoPay mandates for SIPs, insurance, OTTs and utilities remain exempt, while
Key facts
- MDR applies to selected P2M UPI transactions above Rs 2,000
- 0.4% MDR for regular eligible P2M transactions
- MDR capped at Rs 300 for transactions of Rs 75,000 or more
- 0.02% MDR on one-time mutual-fund and eligible capital-market payments, capped at Rs 300
- Rs 5 MDR for specified insurance payments above Rs 2,000
- UPI AutoPay recurring payments, including SIPs and OTT subscriptions, exempt from the new MDR
Why this matters
Prioritize partnerships and payment-routing capabilities that reduce MDR exposure in affected one-time payment categories, while expanding AutoPay use cases in insurance, subscriptions and utilities.
What to watch
- NPCI, RBI or government clarification on covered merchant categories, transaction definitions and enforcement mechanics.
- UPI payment-volume and average-ticket trends for merchant transactions above Rs 2,000 after Oct. 15.
- Growth in transaction splitting, changes in high-value checkout conversion, and shifts to cards, net banking, EMI or cash-on-delivery.
- AutoPay mandate creation, mandate success rates and recurring-collection share following merchant migration efforts.
- Insurance premium collection behavior and distributor adoption of alternative payment methods.
- Merchant-acquirer pricing notices, PSP routing changes and any new convenience-fee practices.
- Industry association lobbying, consumer complaints and indications of policy review.
- Audit UPI payment flows by ticket size, merchant category and one-time versus AutoPay status before Oct. 15.
- Shift eligible repeat bills, subscriptions, SIPs and utility collections to UPI AutoPay enrollment journeys, with clear customer consent and fallback handling.
- Model MDR exposure against gross margin and payment-conversion value; decide which categories should absorb, surcharge where permitted, or steer customers to alternate rails.
- Update checkout routing to identify affected transactions without creating failed-payment or duplicate-payment risk.
- Prepare merchant communications and reconciliation processes for category-specific MDR, especially insurance payment workflows.
- Track whether PSPs, acquirers and aggregators pass through the full MDR or bundle it into revised commercial pricing.