Is MDR Killing Rupay Credit Cards on UPI? A Harsh Reality Check!

[Fini7777]

I've been observing for the past few months that several merchants around me are disabling Rupay credit card acceptance on UPI due to MDR (Merchant Discount Rate) charges for transactions above ₹2,000. Ironically, most Rupay credit cards offer rewards only on transactions above this limit. This creates a frustrating situation for users who expect seamless and rewarding payments via Rupay credit cards on UPI.

The main objective of introducing Rupay credit cards on UPI was to boost digital payments, encourage credit card adoption, and provide a scan & pay feature for small merchants who lack POS machines. This system benefits merchants by increasing their customer base, as credit cards offer purchasing flexibility and deferred payments, which ultimately drive economic growth.

But is MDR killing Rupay credit card adoption on UPI?​

I believe yes, and here’s why:

1️⃣ Merchants disabling Rupay credit card acceptance on UPI due to high MDR.
2️⃣ Misinformation among small merchants—some believe MDR applies to all transactions, whereas it is only applicable for transactions above ₹2,000.
3️⃣ Merchants demanding MDR charges from users to accept Rupay credit card UPI payments, making rewards meaningless.
4️⃣ Lack of awareness among merchants about the benefits of accepting Rupay credit cards.

The core objective of Rupay credit cards for UPI transactions is slowly getting diluted. While many banks offer rewards for payments above ₹2,000, if merchants either refuse to accept them or charge extra MDR, it defeats the whole purpose—leaving users with zero benefits.

Now, the big question: Who is to blame?
👉 Merchants who disable this feature to avoid extra charges?
👉 Banks/Government for imposing MDR on merchants?

I’m not here to blame banks or the government—after all, maintaining payment infrastructure does come at a cost. But the reality is, MDR is discouraging small merchants from enabling this feature, affecting both users and digital payment adoption.

What are your thoughts? Have you faced similar issues while using Rupay credit cards on UPI?

 

[desiviru]

The only way we can do to support Rupay is to pay from our pocket for MDR so our homegrown company builds stronger and have a future.

Govt has already done its part by having no direct Income Tax upto 12L or 12.75L for salaried class. The benefit should be passed by us for Rupay.

Keh do sabke muh pe, se only Rupay.

 

[Abhishek012]

As a end user, it does not matter whether the merchant accepts Visa Master or Rupay as long as they accept a card I am having. It is the responsibility of NPCI to ensure that their cards get proper acceptance and to educate merchants properly. If they fail to do that, end users would just dump rupay cards and go back to visa/master. If NPCI does not bother about ensuring proper acceptance of Rupay cards, rupay cards would soon have their natural death.

The problem is that NPCI does not directly tie up with merchants, except for big merchants.

The KYC details and data of merchants are held by banks.

NPCI issues circulars and provides information on their end.

The rest depends on the banks and how much they inform merchants.

Visa/Mastercard has been in India for the last four decades and has established a strong foothold.

It will take NPCI decades to reach everyone with proper information and they will need the support of everyone.

This is because India’s population is so large and it takes time for Indians to learn and understand something new.

RuPay issued a circular last year to mandate the submission of monthly reports for RuPay transactions - https://www.npci.org.in/PDF/npci/ru...for-Payment-Aggregators-and-key-Merchants.pdf

 

[Tej100]

Well, look, there are two types of people here:

1. Those who support MDR
2. Those who don’t support MDR

The real answer is very, very complicated.

I’ll try to explain it one by one, in a very short manner, covering each point:

1. MDR is necessary. Credit like product have higher risks, which is why MDR is also higher (Credit Card/CC on UPI etc).
2. For small merchants, MDR is free for transactions under ₹2,000 (if the annual turnover is below ₹20 lakhs, MDR won’t apply for payments below ₹2,000).
3. Many small merchants rotate money unnecessarily, crossing the ₹20 lakhs annual turnover limit, which triggers MDR charges.
4. Many small merchants haven’t completed full KYC verification, which is why, by default, they can’t accept credit cards on UPI.
5. Some merchants have blocked credit cards on UPI due to baseless fear caused by false news, like some news saying a pani puri seller got a tax notice, even though he was actually a hotel owner.
6. There are also merchants who genuinely don’t want to pay MDR on credit card transactions via UPI, so they keep it blocked.
7. If MDR fees are reduced to something like 0.25% and restrictions are removed, people might misuse credit cards for free bank transfers, which increases the risk of defaults for banks.
8. Remember, rewards and cashback come from MDR fees. This is why MDR is higher for credit products.
9. There’s also misinformation that MDR for credit cards on UPI is higher compare with direct credit card swipe, but that’s incorrect. People compare POS machines with QR codes like PhonePe or GPay etc.
   
   Listen carefully, If you have a Pinelabs or HDFC POS machine where the MDR fee is 1.2% or 1.5%, the same MDR (1.2% or 1.5%) will apply for credit cards on UPI. Generate UPI QR on your POS machine or online merchant account and accept payment via CC on UPI
   
   However, QR-based merchant platforms like GPay, Paytm, or PhonePe charge 1.9% to 3% MDR.
   
   Each company has its own MDR rates. So, the claim that MDR for credit cards on UPI is higher is incorrect.
10. MDR charges also depend on the business category. For example, BharatPe QR charged 1.25% MDR for someone in the electronics category, while PhonePe charged 1.3% MDR for grocery category payments via credit cards on UPI.
    Incorrect registration under a business category can result in higher MDR charges and many small merchants aren’t aware of this.
11. If you carefully read points 9 and 10, you’ll notice that in many clubs, bars, big malls, grocery stores etc, when you try to pay using the QR codes issued by Paytm, GPay, or PhonePe, credit card on UPI will be disabled.
    
    However, if you ask for their POS machine and swipe your credit card, the payment will go through easily.
    
    In such cases, both customers and merchants think that MDR for credit cards on UPI is higher. But in reality, the MDR for Paytm, GPay, or PhonePe QR is higher.
    
    If you generate a QR code on their POS machine and pay via credit card on UPI, the merchant will have to pay the same MDR they are paying for credit card swipes.

Recently, a Technofino member also confirmed this on his POS machine.
But not every merchant and customer is that smart -

Post in thread 'Payment Gateway MDR Negotiations'

Mar 19, 2025

CC on UPI also same charges ?

Yes, Rupay CC UPI would attract 1.2% MDR.

• SilentVoyager

• 

Finally one sensible person who just doesn’t say remove mdr or be like 0% rewards for upi for customers
I am pretty sure the same ppl who say remove mdr r the ones who use credit card on upi only for that 1% rewards ,the other reasons they give r crap

 

[rajcasio]

MDR @ 2.25% + GST for merchant on RUPAY CC transaction <2000
My brother has a small business and got PAYTM QR code for business
Sometimes he used to buy me Grocery/Dairy products when i'm away home.
I pay him through the QR with my unused CC's (i've got 9 RUPAY CC) for the past few years.
The total amount won't cross 2000 per month. NO MONEY ROTATION.
From this month(JUNE) he receives amount only after the 2.25% + GST deduction.
Till last month everything was fine.
This month i paid him 400 & 200 INR through RUPAY CC and he received 389.38 & 194.69 respectively.
That QR code is used only by me. He has other Phonepe QR for business.
I now started to pay him directly through SAVINGS BANK upi to avoid money loss.
So what has happened here? Is MDR charged <2000?
Any merchants here to give details on it?

 

[Sobirvs]

So what has happened here? Is MDR charged <2000?

If the business turnover is more than 20L, then it will attract charges for even <2k trxns.

 

[rajcasio]

If the business turnover is more than 20L, then it will attract charges for even <2k trxns.

Its his side business and yearly QR transaction doesn't exceed 1 lakh because he mostly deals with CASH. He didn't file ITR yet.

 

[Raghav2006Raghav2006 is verified member.]

Just an assumption, but is it possible that if a business has allowed cc payment of 2k+ then all transactions are charged MDR, irrespective of amount?

 

[Fini7777]

MDR @ 2.25% + GST for merchant on RUPAY CC transaction <2000
My brother has a small business and got PAYTM QR code for business
Sometimes he used to buy me Grocery/Dairy products when i'm away home.
I pay him through the QR with my unused CC's (i've got 9 RUPAY CC) for the past few years.
The total amount won't cross 2000 per month. NO MONEY ROTATION.
From this month(JUNE) he receives amount only after the 2.25% + GST deduction.
Till last month everything was fine.
This month i paid him 400 & 200 INR through RUPAY CC and he received 389.38 & 194.69 respectively.
That QR code is used only by me. He has other Phonepe QR for business.
I now started to pay him directly through SAVINGS BANK upi to avoid money loss.
So what has happened here? Is MDR charged <2000?
Any merchants here to give details on it?

I heard that Paytm has started charging MDR for below 2k txns too

 

[Sobirvs]

Its his side business and yearly QR transaction doesn't exceed 1 lakh because he mostly deals with CASH. He didn't file ITR yet.

earlier also there was a charge of mdr via rupay but govt used to subsidize it for trxns below 2k. There was an article that govt is cancelling that subsidy. Idk if that has been executed, if yes, then here's your answer.

Industry expects around Rs 600 crore loss as government nixes RuPay subsidy

The digital payments industry faces a Rs 500-600 crore loss as the government withdraws RuPay debit card subsidies. Fintech firms seek MDR reinstatement or higher subsidies, fearing unsustainable transactions and reduced RuPay card issuance by major banks.

economictimes.indiatimes.com

 

[Fini7777]

Just an assumption, but is it possible that if a business has allowed cc payment of 2k+ then all transactions are charged MDR, irrespective of amount?

No, the MDR is applicable only if txn amount exceeds 2k,
I use HDFC and PhonePe Business QRs and accept Rupay CC
The charges will apply to transactions above 2k.

 

[Fini7777]

earlier also there was a charge of mdr via rupay but govt used to subsidize it for trxns below 2k. There was an article that govt is cancelling that subsidy. Idk if that has been executed, if yes, then here's your answer.

Industry expects around Rs 600 crore loss as government nixes RuPay subsidy

The digital payments industry faces a Rs 500-600 crore loss as the government withdraws RuPay debit card subsidies. Fintech firms seek MDR reinstatement or higher subsidies, fearing unsustainable transactions and reduced RuPay card issuance by major banks.

economictimes.indiatimes.com

It is related to Rupay DC not Rupay CC AFAIK

 

[Raghav2006Raghav2006 is verified member.]

No, the MDR is applicable only if txn amount exceeds 2k,
I use HDFC and PhonePe Business QRs and accept Rupay CC
The charges will apply to transactions above 2k.

understood, thanks for educating me

 

[Abhishek012]

MDR @ 2.25% + GST for merchant on RUPAY CC transaction <2000
My brother has a small business and got PAYTM QR code for business
Sometimes he used to buy me Grocery/Dairy products when i'm away home.
I pay him through the QR with my unused CC's (i've got 9 RUPAY CC) for the past few years.
The total amount won't cross 2000 per month. NO MONEY ROTATION.
From this month(JUNE) he receives amount only after the 2.25% + GST deduction.
Till last month everything was fine.
This month i paid him 400 & 200 INR through RUPAY CC and he received 389.38 & 194.69 respectively.
That QR code is used only by me. He has other Phonepe QR for business.
I now started to pay him directly through SAVINGS BANK upi to avoid money loss.
So what has happened here? Is MDR charged <2000?
Any merchants here to give details on it?

NPCI uses Nvidia's GH200 Grace Hopper Superchip for AI. What do you think — you’ll send money to your brother to do a personal transaction and Nvidia's AI won’t find out? 🤣🤣

 

[signior-x]

Folks disable it a lot. Even government sites like house tax payments, irctc doesn't accept. How can we expect others to if government is itself not accepting.