On this page
Centre weighs MDR of up to 0.35% on high-value UPI payments
Our read
High-value UPI turns from a zero-cost growth rail into a negotiated retail acceptance expense, accelerating payment-routing and checkout optimization at large chains.
For operators
Large retailers should model a potential 0.35% MDR on UPI transactions above Rs 2,000 and consider nudging high-value customers toward lower-cost payment options while smaller merchants retain an exemption buffer.
Watch
Final finance ministry, RBI, or NPCI notification specifying merchant categories, turnover test, threshold calculation, and effective date.
The report,
The Centre is considering MDR charges on high-value UPI and RuPay debit-card payments, while exempting smaller merchants. The proposal could raise payment-acceptance costs for large Indian retailers but fund banks and payment providers’ infrastructure, with consumer UPI usage remaining free.
Channel facts
From the report. Source details below
| 0.25%-0.35% proposed MDR on UPI transactions above | Rs 2,000 for large merchants |
|---|---|
| Merchants with annual turnover | up to Rs 1.5 crore likely exempt |
| 0.15% government incentive on UPI transactions below | Rs 2,000 |
| Credit-card MDR around 2%; non-RuPay debit-card MDR | around 0.9% |
| 86% of P2M UPI transactions are below Rs 500; 10% are | Rs 501-2,000 |
| Around 60 million Indian merchants accept digital payments; 90% have turnover | up to Rs 20 lakh |
| UPI recorded 23.66 billion transactions in July | 2026 |
| FY26 UPI volume exceeded 241.62 billion transactions and value reached | about Rs 314 lakh crore |
Also in the report
- Transactions of Rs 2,000 and above are 4% of P2M UPI transactions
- DFS said incentives cover about 11% of industry costs and 14% of potential MDR revenue
- Zeta expects UPI MDR of 0.05%-0.07% and RuPay debit MDR of 0.15%-0.20%
What it means for online and offline
The policy could increase the strategic value of payment-routing, merchant-acquiring and checkout-optimisation partnerships that help large retailers manage UPI acceptance costs.
Signals to track
- Whether MDR is charged to merchants only or whether any form of consumer surcharge is permitted or prohibited.
- Definition of 'large merchant,' including treatment of chains, franchises, marketplaces, aggregators, and GST-linked group turnover.
- Acquirer and payment-gateway announcements on revised UPI pricing, settlement terms, and incentives.
- Changes in UPI transaction distribution just below and above Rs 2,000, especially in electronics, grocery, fashion, pharmacy, and quick commerce.
- Retailer migration toward RuPay credit cards on UPI, card acceptance, pay-later products, or direct bank-payment rails.
Show 1 more
- Any government subsidy or compensation mechanism for banks and payment service providers that reduces the need for merchant MDR.
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Model incremental acceptance cost by store format, payment mix, average basket value, and UPI transactions above Rs 2,000.
- Audit checkout flows for compliant payment steering: promote low-cost rails without making consumer UPI payments meaningfully harder.
- Renegotiate acquiring and gateway contracts, seeking blended MDR caps, volume rebates, and lower pricing for debit cards, net banking, and payment links.
- Review promotional funding on high-value UPI orders; shift discounts toward merchant-funded loyalty, bank offers, or lower-cost payment rails.
- Prepare merchant communications and POS training so staff can explain payment options without imposing unauthorized consumer surcharges.
Show 1 more
- Track whether marketplace sellers, franchisees, and third-party delivery partners bear the fee contractually or whether the platform absorbs it.
The counter-case
The case against this reading — not reported by the source.
The headline may overstate the near-term impact: this is a proposal, not a notified rule, and any MDR could be capped, deferred, narrowed, or offset through incentives. Even if introduced, a 0.35% charge only affects UPI payments above Rs 2,000 at large merchants, so the effective cost increase may be modest because many retail UPI transactions fall below that threshold. Large chains may also absorb the fee, steer users toward cards or other payment modes, renegotiate acquiring terms, or pass on limited costs without materially altering omnichannel economics.
The source
Published
First seen