RuPay Credit Card on UPI: MDR and Merchant Charges Explained

The integration of RuPay Credit Cards with UPI has opened up credit payments for millions of consumers in India. However, unlike standard bank-to-bank UPI transfers which are completely free (0% MDR), credit card UPI transactions are subject to processing fees.

In this guide, we break down what charges apply to merchants when customers scan their QR codes using a linked RuPay credit card.

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The Rule: Small Merchants are Exempt

To protect small micro-merchants and kirana stores, the NPCI has set clear rules regarding MDR:

• Transactions under ₹2,000: There is zero MDR (0% charge) for transactions under ₹2,000 processed on RuPay credit cards via UPI.
• Small Merchants: Small retail outlets with low annual turnovers are exempt from credit card processing fees for standard micro-payments.

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Charges for Large Merchants (Transactions over ₹2,000)

For transactions exceeding ₹2,000 processed on RuPay credit cards:

• An MDR of up to 2.0% + GST (typically shared between the card issuing bank and the UPI app provider) may be charged to the merchant.
• This is similar to the charges applied when swiping a physical credit card on a Point of Sale (POS) machine.

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How Merchants Can Manage Credit Card UPI

• Reconciliation: Check your business app (GPay Business/PhonePe Business) settings. You can choose to disable RuPay Credit Card acceptance if you only want to accept 100% free bank-to-bank UPI transfers.
• Keep Track: Most daily customer payments at local stores are under ₹2,000, meaning you will rarely pay any transaction fees while still offering convenient credit payment options to your customers.