On this page
Trade body seeks rollback of proposed 0.4% UPI MDR on merchant payments above ₹2,000
Our read
The proposed UPI MDR is more likely to be deferred or narrowed than implemented unchanged, but the episode increases the probability that large merchants eventually face differentiated UPI acceptance pricing.
For operators
If implemented, the proposed 0.4% UPI MDR on merchant payments above ₹2,000 would raise acceptance costs for larger transactions, prompting retailers to review payment-routing, pricing and customer-incentive policies ahead of October 15.
Watch
Formal government, NPCI, RBI or finance-ministry notification confirming the October 15 effective date and legal authority for the charge.
Ask next
The report,
Trade body CTI urged the government to roll back a proposed 0.4% MDR on UPI merchant payments above ₹2,000, warning of pressure on 6 crore traders and lower high-value digital-payment adoption. Small merchants and most transactions remain exempt.
- Total UPI transaction value, FY2025-26about ₹314 lakh crore
- UPI merchant payments value, FY2025-26about ₹198 lakh crore
- UPI transactions above ₹2,000 value, FY2025-26₹131 lakh crore
Reported figures
From the report. Source details below
| Merchant payments accounted for | about ₹198 lakh crore |
|---|---|
| CTI estimates UPI payments above ₹2,000 could decline by | up to 50% |
| ₹5 flat fee for essential-service transactions above | ₹2,000 |
Also in the report
- ₹300 maximum MDR per transaction
- ₹1 lakh monthly UPI QR receipt exemption threshold for small merchants
- UPI processed 24,162 crore transactions worth about ₹314 lakh crore in FY2025-26
- Transactions above ₹2,000 represented about 4% of transaction volume and ₹131 lakh crore in value
- 0.02% MDR for capital-markets transactions
- 18% GST on merchant fees to be considered
- 5% of MDR collections proposed for a small-merchant UPI promotion fund
Why it matters to operators
Payments platforms and merchant acquirers could see renewed economics in higher-value UPI acceptance, making partnerships with large-format retailers and value-added payment services more strategically attractive.
What to watch next
- Details of the ₹1 lakh monthly QR-receipts exemption, including whether it is merchant-level, QR-level, entity-level, or based on prior-period receipts.
- Statements from major merchant associations, banks, PSPs, QR aggregators and consumer groups regarding a rollback or revised threshold.
- Large retailer announcements on absorbing fees, imposing convenience charges, minimum-ticket rules, or payment-method steering.
- UPI transaction mix changes: decline in tickets above ₹2,000, increased split payments, or migration toward cards and cash.
- Any compensating subsidy, interchange revision, or government commitment to fund UPI infrastructure costs.
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Model MDR exposure by merchant size, average UPI ticket, and share of transactions above ₹2,000; prioritize grocery, electronics, apparel, pharmacy and quick-commerce categories.
- Prepare checkout and merchant-communication options for surcharge absorption, price adjustment, payment steering, and transaction-cost reporting.
- Engage trade bodies and payment partners on a tiered MDR structure tied to merchant turnover rather than only monthly QR receipts.
- Review whether customers could split payments or shift to alternative rails, creating higher checkout friction and reconciliation costs.
- Negotiate acquiring-bank and PSP pricing early, since providers may use the policy change to reprice adjacent payment services even if the proposal is diluted.
The counter-case
The case against this reading — not reported by the source.
The impact may be overstated: the ₹2,000 threshold, ₹1 lakh monthly QR-receipts exemption and ₹300 cap limit exposure for small merchants, while larger merchants may absorb or pass through the fee. A modest MDR could also fund UPI infrastructure, fraud controls and bank participation, preserving service quality rather than deterring usage.