Overview
- NPCI formalised the change on Sep 15 and the 0.4% merchant discount rate will apply to specified person‑to‑merchant UPI transactions above ₹2,000 from Oct 15, 2026, with a cap of ₹300 on very large payments.
- NPCI and the government say merchants—not customers—will bear the fee and have pledged monitoring to stop pass‑through, but they have not published detailed enforcement rules.
- Merchant groups have already reacted: traders in Ghaziabad posted 'No UPI' notices and petrol‑pump associations in Madhya Pradesh and elsewhere have voted to refuse UPI above the threshold starting in mid‑October.
- Analysts estimate the MDR could create a ₹15,000–20,600 crore annual revenue pool that will be shared among banks, UPI app providers and aggregators, raising distributional and competition questions.
- Payment experts warn of practical loopholes—splitting bills, routing receipts through P2P IDs or multiple accounts—and NPCI currently has no separate daily cap to block such workarounds, which could push some transactions back to cash or cards.