Actually, more revenue support is needed for offline merchant acquiring
FinTech BizNews Service
Mumbai, 16 September, 2026: The finalized Merchant Discount Rate (MDR) framework and threshold structure will take effect from 15th October 2026. FAQs on MDR by NPCI make amply clear the applicability of MDR for different stakeholders, including end user of UPI. The MDR is distributed only amongst the UPI ecosystem, to further invest into infrastructure resiliency, innovation, cybersecurity (protecting the UPI Infrastructure with banks and non-banks) and customer service.
A MDR of 0.4% will be introduced on Person-to-Merchant (P2M) UPI transactions above Rs 2,000/-. For transactions of Rs75,000/- and above, the MDR will be capped at Rs300 per transaction. UPI MDR is structured to be much lower than all traditional card-based transaction fees. Standard credit card MDRs typically range from 1.5% to 2.5% per transaction, while debit card MDRs are capped up to 0.90%. By setting the baseline UPI MDR at 0.4% on transaction above Rs 2,000 and capping it at Rs300 for high-value purchases, UPI remains the most affordable digital payment acceptance tool for commercial enterprises.
Demonstrating unprecedented public adoption, UPI processed an astonishing 2,451 crore transactions valued at Rs29.9 lakh crore in August 2026 alone. This immense volume highlights UPI's role as the primary financial engine of the Indian economy, handling hundreds of millions of daily payments. Handling this scale requires massive physical server infrastructure, high-speed telecommunication lines, multi-tiered cybersecurity monitoring, and specialised banking software. These transaction figures reinforce why establishing a self-sustaining funding framework was necessary to guarantee system stability.
The finalized MDR framework and threshold structure take effect from 15th October 2026.
Mr. Ketan Doshi, MD, Pay Point India Network Pvt. Ltd, believes: “It is a good start. Depends on which category of merchants we acquire. Online merchants will give us more revenue and offline transaction size is mostly below Rs2000. Actually, more revenue support is needed for offline merchant acquiring.
On Issuance side, affluent class will subsidize the others. Also, it looks like the Rupay acquiring business will be dead.”
