A Supreme Court PIL challenges the new 0.4% MDR on UPI payments above ₹2,000, set for October 2026. This marks the first major legal pushback against the fee structure, arguing it's arbitrary and hurts businesses. If upheld, consumers could ultimately pay more, and merchants might discourage larger UPI transactions.
How We Got Here
The Finance Ministry issued a September 14 notification, later followed by a September 15 framework introducing MDR for specific UPI P2M transactions. This new fee structure is scheduled to kick in from October 15, 2026.
The Numbers
- 0.4% MDR on P2M UPI payments over ₹2,000, capped at ₹300 for transactions above ₹75,000.
- Railways, telecom, and fuel sectors will see a flat ₹5 charge on UPI payments exceeding ₹2,000.
- The framework keeps person-to-person UPI transfers free, regardless of the transaction amount.
- Small merchants receiving up to ₹1 lakh monthly via UPI QR codes are exempt from this new MDR framework.
- The PIL argues RuPay debit cards get unlimited no-charge protection, contrasting sharply with UPI's ₹2,000 merchant payment limit.
What Happens Next
🇮🇳 Why This Matters for India
For founders building payment-reliant platforms in Bangalore or hundreds of thousands of digital-first SMBs in Pune, these charges could complicate business models and cash flows by 2027.
The Take
The government is making a bet that small merchants and P2P users won't notice, but the real issue is the lack of transparent data for the arbitrary ₹2,000 threshold. Expect a significant push from merchants to either absorb this or nudge higher-value customers towards cards by late 2026.
Source:
MediaNama ↗