UPI MDR On Transactions Above ₹2,000 May Start Within Two Weeks: Report

The Central government may introduce an MDR on UPI transactions above Rs 2,000 within two weeks, according to a Financial Express report. The process will likely start with a gazette notification issued by the Department of Financial Services. The notification will identify electronic payment methods eligible for statutory protection against the MDR.

Subsequently, a Services Steering Committee chaired by the National Payments Corporation of India (NPCI) will decide on the framework, scope, and rate structure for the proposed levy. Experts caution that retaining a zero MDR for small merchants is crucial to safeguard UPI's inclusion gains. Unlike the current zero MDR framework, the proposed change would mark a significant shift in India's digital payment landscape.

The government insists that any MDR on qualifying transactions will not be passed on to consumers, a stance reiterated during parliamentary discussions on the Taxation and Other Laws (Amendment) Bill, 2026. This levy would amend the Payments and Settlement Systems Act, 2007, enabling the introduction of MDR for digital transactions exceeding a certain threshold.

While this represents a partial departure from the existing zero MDR policy, the final details, such as the specific rate and covered transactions, are yet to be determined after the government's notification and the NPCI-led committee's deliberations. Merchants will need to assess how the extra cost affects their digital transaction economics, but consumers are expected to remain insulated from direct charges.