“Rationalising” UPI merchant discount rates (MDR) means redesigning how payment acceptance costs are charged and shared; it does not, by itself, confirm a new rate. RBI material records a direction that no MDR be collected on UPI and RuPay debit-card transactions from January 1, 2020. September 2026 news coverage reports renewed debate over a framework, but the specific reported terms are not established by the official materials cited here.
What UPI MDR is—and who pays it
Merchant discount rate (MDR) is a fee associated with payment acceptance services. It is a merchant-side cost, distinct from a charge that a consumer might see on a transaction. RBI describes MDR as being distributed among participants in the payment chain, so a policy change can affect more than the merchant’s bill: it can also change how payment providers are compensated.
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Whether a proposed framework is workable depends on its details: which transactions are covered, which merchants pay, how the fee is divided, and whether merchants can pass any cost on to customers.
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What the historical UPI policy timeline shows
NPCI announced a UPI MDR structure in 2019
NPCI’s August 2019 announcement described an earlier UPI MDR structure. It set zero MDR for offline QR Scan and Pay transactions up to ₹100 and described a 0.30% maximum rate, capped at ₹100, for the large-ticket transactions covered by that announcement. These are historical terms from the 2019 release, not evidence of rates under a later framework. NPCI’s 2019 announcement
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A no-MDR direction was recorded from January 1, 2020
RBI’s 2022 payment-system assessment records the Government’s direction that no MDR be collected on UPI and RuPay debit-card transactions effective January 1, 2020. This is a historical policy statement in that report; it should not be treated as confirmation of the legal terms reported in September 2026. RBI’s payment-system assessment
Why changing MDR involves a policy trade-off
Payment systems require ongoing operations and investment, and providers need a way to support those costs. At the same time, a fee that makes digital acceptance less attractive can discourage merchants—or customers—from using it. RBI’s assessment describes this tension between charges that may inhibit adoption and prices too low to sustain continued investment.
That is a design problem, not proof that any particular MDR rate would produce a specific result. Supporters of revisiting the framework, as described in September 2026 coverage, argue that fees could help fund infrastructure and make the system more sustainable. GTRI and merchant groups are reported to have warned about higher business costs and a possible shift toward cash. Those are attributed arguments and predictions, not established outcomes. No named expert consensus or verified quotation establishing the title’s exact call is available in the cited material.
What a rationalised framework would need to specify
The word “rationalising” is a call to calibrate a framework, not a settled rate change. A meaningful proposal would need to answer several questions:
- Transaction eligibility: Which UPI transactions would incur a fee, and which would remain exempt? NPCI’s 2019 distinction for offline QR payments shows that transaction type can matter.
- Merchant size: How would “small merchant” status be defined—by turnover, transaction volume, or another measure? The threshold and measurement period would need to be explicit.
- Acceptance method: Would QR, point-of-sale (POS), and other methods be treated differently? RBI’s 2017 debit-card MDR draft considered physical POS versus digital acceptance infrastructure, but it concerned debit cards, not UPI. It is a precedent for a design question, not evidence of UPI terms. RBI’s 2017 debit-card MDR draft
- Fee distribution: How would any fee be shared across participants in the payment chain, and which costs would it be intended to support?
- Safeguards: Would rules limit pass-through to consumers or protect small merchants from charges that could undermine acceptance?
Without these details, the label “rationalised” says little about who would pay, what services the fee would support, or how the system’s incentives would change.
What is confirmed—and what remains reported
| Point | What the cited source establishes |
|---|---|
| 2019 UPI MDR terms | NPCI’s 2019 announcement described zero MDR for offline QR Scan and Pay transactions up to ₹100 and a 0.30% maximum rate capped at ₹100 for the large-ticket transactions it covered. Historical terms only. |
| No-MDR direction from January 1, 2020 | RBI’s 2022 assessment records the Government’s direction covering UPI and RuPay debit-card transactions. |
| Renewed framework debate in September 2026 | Rediff’s news index carries reports describing a new framework and stakeholder reactions; this is secondary reporting, not an official instrument. Rediff news index |
| Specific 2026 rates, thresholds, caps, exemptions, or effective date | Not confirmed by the official materials cited here. The NPCI circular index cited here does not identify a circular establishing those reported terms. |
Accordingly, the September reports should be read as accounts of a policy debate, not as a definitive statement of current legal requirements. The reported terms should not be treated as settled without an official notification or circular that specifies them.
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