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UPI MDR can't be passed on to shoppers, says Punjab & Sind Bank MD; customers pay only the posted price
Our read
Because merchants must absorb the MDR and can't pass it on, expect more demand for tools that offset the cost, such as payment-mix optimisation, cards and EMI, and loyalty, which makes acquirers and POS or payments-tech assets with a high-ticket merchant base more attractive targets ahead of the Oct 15, 2026 start.
Watch
Any circular or FAQ from the regulator or NPCI on surcharging or the Rs 2,000 threshold
The report
UPI payments to merchants above Rs 2,000 will attract a 0.4 per cent MDR from October 15, capped at Rs 300, and Punjab & Sind Bank's MD says merchants cannot pass it on to customers. Transactions up to Rs 2,000, over 95 per cent of P2M volume, are unaffected.
Newer report adds to this story , : IIT-Bombay report proposes a 0.08% MDR instead of 0.40%.
Reported figures
From the report. Source details below
| Flat MDR for railways, telecom, insurance, fuel above Rs 2,000: | Rs 5 per transaction |
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What to watch next
- Merchant association statements asking for a revised cap or a delayed start
- Retailer or aggregator notices of repriced acquiring terms before Oct 15, 2026
- Consumer complaints of UPI-specific surcharges or 'cash discount' offers at checkout
- UPI P2M volume mix shifting toward bills at or just under Rs 2,000 after go-live
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Large-ticket merchants (electronics, jewellery, appliances and similar) are likely to lobby for a higher threshold or a lower cap, since the Rs 300 ceiling bites hardest on big baskets.
- Banks and payment aggregators are likely to send merchants repriced acquiring terms and MDR notices ahead of Oct 15, 2026.
- Some retailers may nudge shoppers toward cash, cards or sub-Rs 2,000 split payments on larger bills, rather than add an explicit UPI surcharge.
- Regulators and bank executives are likely to keep repeating that customers pay only the posted price, and may issue clarifications on surcharging.
- Railways, telecom, insurance and fuel operators are likely to treat the flat Rs 5 above Rs 2,000 as manageable and make little change to their checkout flows.