5 days ago
UPI, Debit and Credit Card MDR Costs Compared
MDR is the fee a merchant may pay when accepting a digital payment.
Some eligible UPI payments above ₹2,000 now have a merchant fee of 0.4%.
For example, a ₹5,000 payment would cost the merchant ₹20.
The UPI fee cannot exceed ₹300.
Debit cards follow separate Reserve Bank of India rules with different rates and limits.
Credit cards do not have one standard rate for every transaction.
Their fees depend on agreements among card companies, banks, payment providers and merchants.
UPI is still described by industry participants as cheaper than many card-payment arrangements, but the actual cost depends on the transaction and payment method.
Eligible UPI merchant transactions above ₹2,000 carry a 0.4% MDR, capped at ₹300.
A ₹5,000 eligible UPI payment would cost the merchant ₹20, while a ₹50,000 payment would cost ₹200.
The ₹300 UPI cap becomes relevant at transaction values of ₹75,000 or more.
Under the Reserve Bank of India’s December 2017 framework, debit-card MDR ceilings varied by merchant size and acceptance method.
Credit-card MDR is commercially determined and can vary according to the network, issuer, acquirer, payment provider and merchant agreement.
- Who
- Merchants accepting eligible UPI, debit-card or credit-card payments, along with card networks, issuers, acquirers and payment service providers.
- What
- The article compares merchant discount rates and applicable caps for UPI, debit-card and credit-card payments.
- Where
- The framework concerns merchant payment acceptance under the Reserve Bank of India’s rules and the UPI ecosystem.
- When
- The UPI change is referenced as taking effect from October 15; the debit-card comparison cites RBI rules issued in December 2017.
- Why
- To explain how merchant acceptance costs differ across payment methods and how transaction value, merchant category and payment arrangements affect those costs.
Key facts
- UPI rate
- 0.4% on specified person-to-merchant transactions above ₹2,000
- UPI cap
- ₹300 maximum MDR
- UPI examples
- ₹20 on ₹5,000; ₹200 on ₹50,000
- UPI cap threshold
- The ₹300 cap becomes relevant at ₹75,000
- Debit cards
- RBI-prescribed ceilings vary by merchant size and acceptance method
- Small-merchant debit ceiling
- Up to 0.40% for physical or online card transactions and 0.30% for QR-based card acceptance, with a ₹200 cap under the cited 2017 framework
- Credit cards
- MDR is commercially determined and varies by network, issuer, acquirer, payment provider and merchant arrangement
Sources
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