World · India Bureau
NPCI overhauls UPI merchant charges, introduces new MDR framework
India's payments regulator has revised merchant discount rate rules for UPI transactions effective October 15, introducing a tiered fee structure that could impact digital payment adoption among small merchants.
LSN India ·
The National Payments Corporation of India (NPCI) has implemented a new merchant discount rate (MDR) framework for selected UPI transactions, marking a significant shift in the country's digital payments landscape. The revised structure, effective from October 15, introduces charges on higher-value transactions while maintaining fee-free operations for smaller payments.
Under the new guidelines, transactions exceeding ₹2,000 will attract a 0.4 percent charge on the transaction value. However, a maximum ceiling of ₹300 per transaction has been set to prevent excessive merchant fees. Transactions valued at ₹75,000 or above will incur the maximum charge of ₹300, regardless of the actual transaction amount.
Customers making UPI payments up to ₹2,000 will not face any additional charges, preserving the fee-free experience for everyday transactions. The framework applies specifically to merchant transactions, distinguishing between retail and higher-value business payments.
The move aims to balance the interests of merchants, payment service providers, and consumers while maintaining the accessibility and affordability that has driven UPI's rapid adoption across India. Small merchants and consumers using UPI for routine purchases remain unaffected by the changes, which primarily target larger commercial transactions.