Merchants absorb 0.4% on UPI baskets above Rs 2,000 from October 15

Anyone writing the fee model needs four inputs: the ticket size, the merchant category, the merchant's classification, and the funding instrument. The 0.4% applies to the whole ticket. NPCI's examples put Rs 12 on a Rs 3,000 payment and Rs 200 on a Rs 50,000 one ^[4]. A basket that crosses the line by one rupee costs the seller about Rs 8 ^[1].

NPCI said in a statement that "For transactions of Rs 75,000 and above, the MDR will be capped at Rs 300 per transaction" ^[2]. That cap is exactly 0.4% of Rs 75,000. The rate is flat up to that point and declines above it: at Rs 2 lakh the effective rate is 0.15% ^[2]. UPI processed 2,451 crore transactions worth Rs 29.9 lakh crore in August ^[21], an average of roughly Rs 1,220 per transaction across all traffic, person-to-person transfers included ^[7].

Category is where the spread is widest. Railways, telecom, insurance, fuel and public utility payments above Rs 2,000 are charged a flat Rs 5 ^[7]. A Rs 50,000 fuel payment costs Rs 5 where the same value through an ordinary merchant costs Rs 200, a factor of 40 ^[3]. Capital market payments to mutual funds, stockbrokers and investment platforms carry 0.02% capped at Rs 300, and that cap does not bind until Rs 15 lakh ^[8][4].

Recurring collections through UPI AutoPay stay exempt ^[10]. On a Rs 5,000 monthly subscription that is the difference between nothing and Rs 20 a month, Rs 240 a year per subscriber ^[5]. Mandate setup is the harder integration, and collecting the same money as a one-off now costs 0.4% of it.

The small-merchant carve-out depends on a rolling monthly total. P2PM merchants keep zero MDR above Rs 2,000 while QR-based UPI payments made directly to their accounts stay within Rs 1 lakh a month. Crossing that for three consecutive months moves them into the P2M category ^[11]. Onboarding and billing systems have to hold that counter, because the fee changes underneath an account whose integration never changed.

Bernstein estimated that 40 basis points applied to half of UPI merchant payments by value could generate a Rs 22,000 crore annual revenue pool by 2027-28 ^[18]. Jefferies puts above-threshold payments at about 4% of volume but 67% of value ^[20], and NPCI says more than 95% of merchant payment volume is Rs 2,000 or below ^[19]. Bernstein's billable base sits 17 percentage points of value below the eligible band ^[6], about the room the concessional categories and the exemptions occupy. For that pool to arrive, fuel, utilities and capital markets have to stay a modest share of above-threshold value, and large baskets have to keep landing on bank-account rails. RuPay credit cards and pre-sanctioned credit lines run under separate rules ^[6].

The revenue split is what acquirers and aggregators have to price against, and the FAQs do not disclose it ^[15]. ET reported on September 11 that one proposal gave 40% to the issuing bank, 30% to the consumer-side app and 30% to the acquiring side, or 16, 12 and 12 basis points ^[15]. Under that proposal, aggregators such as Razorpay and Cashfree would negotiate a share of the acquiring-side portion with acquiring banks ^[16]. Bernstein said app-bank splits would likely be negotiated commercially ^[17].