New Delhi, September 16(APAC Media): UPI merchant payments above ₹2,000 will attract a new charge from October 15.
The National Payments Corporation of India (NPCI) has set a 0.4% Merchant Discount Rate (MDR) on specified Person-to-Merchant (P2M) UPI transactions above ₹2,000. The MDR will be paid by merchants and will be capped at ₹300 per transaction. UPI payments between individuals will remain outside the framework.
UPI Charges Above ₹2,000
The new UPI MDR applies only to eligible merchant transactions. Payments of ₹2,000 or below will not attract the 0.4% MDR.
For example, a ₹5,000 UPI payment would result in an MDR of ₹20. On a ₹50,000 transaction, the charge would be ₹200. The ₹300 maximum applies once the transaction value reaches ₹75,000.
The change means merchants accepting higher-value UPI payments will have a defined payment-acceptance cost from October 15, while customers will not be charged the MDR.
UPI Vs Debit Card MDR
The new UPI MDR is not directly comparable with debit-card charges because the two payment systems follow different rules.
Under the RBI’s debit-card MDR framework, small merchants with annual turnover of up to ₹20 lakh had a maximum MDR of 0.40% for physical POS and online transactions, subject to a ₹200 cap. The ceiling for QR-based card acceptance was 0.30%, also capped at ₹200.
For other merchants, the limits were 0.90% for physical POS and online transactions and 0.80% for QR-based acceptance, with a ₹1,000 transaction cap.
UPI Vs Credit Card Charges
Credit-card MDR works under a different commercial structure. There is no single rate that applies to every credit-card transaction. The merchant’s cost can vary depending on the card network, issuing bank, acquiring bank, payment provider and merchant agreement.
This makes the new 0.4% UPI MDR easier to identify as a fixed framework for eligible transactions, but not directly comparable with every credit-card acceptance cost.
What The New UPI MDR Means
The key change is that selected higher-value UPI merchant payments will now carry a merchant-side MDR. The rate is 0.4%, with a ₹300 cap, while UPI payments up to ₹2,000 and person-to-person transactions remain outside this MDR framework.
For merchants, the final impact will depend on their average transaction value and the share of payments received through UPI, debit cards and credit cards.
