Regulatory
NPCI Introduces MDR on Select UPI P2M Payments Above Rs 2,000
11 October 2026 · www.business-standard.com
NPCI's September 15 circular imposes a 0.4% MDR on person-to-merchant UPI payments above Rs 2,000, paid by merchants, with a cap of Rs 300 for transactions of Rs 75,000 or more. An IIT Bombay report argues the framework should be rationalised before implementation to protect public trust and suggests MDR apply only to merchants with turnover above Rs 50 crore.
Points to Remember
- NPCI circular dated September 15: 0.4% MDR on P2M UPI payments above Rs 2,000; merchant bears the charge, not the consumer.
- MDR capped at Rs 300 for transactions of Rs 75,000 or more.
- Essential services such as railways, telecom, fuel and insurance to pay a flat Rs 5 per transaction above Rs 2,000.
- Capital markets transactions (mutual funds, stockbroking) attract a lower 0.02% rate, also capped at Rs 300.
- IIT Bombay report recommends restricting MDR to merchants with annual turnover above Rs 50 crore (about 4 crore per month), and zero MDR on debt collection and loan EMI repayments via UPI.
Why it matters
Merchant customers may see higher effective costs on large digital payments or ask whether UPI charges apply to them. Loan EMI and debt repayment through UPI are proposed to stay free, so customer-facing collections remain unaffected for now.
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