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

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Fini7777

Fini7777

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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?
 
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Fini7777 said:
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?
Click to expand...
True Even medical shops near me have stopped accepting Rupay credit card on upi but somehow one kirana store which I usually go to still accepts card on upi which is good.
 
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Fini7777 said:
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?
Click to expand...
For that (MDR) , 1500 Cr has been approved by cabinet.
pib.gov.in

Cabinet approves Incentive scheme for promotion of low-value BHIM-UPI transactions (P2M)

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi today approved the ‘Incentive Sch
pib.gov.in
 

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Fini7777 said:
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?
Click to expand...
Exactly....
I was thinking about the same today....
Despite promoting it at such high level, small merchants don't prefer payment from Rupay CC
I just read that MDR on Rupay cards is almost double than Visa and mastercard...
If that was the case then what was the need to unnecessary introduce a new system.....
B******IT
 
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Riya said:
Exactly....
I was thinking about the same today....
Despite promoting it at such high level, small merchants don't prefer payment from Rupay CC
I just read that MDR on Rupay cards is almost double than Visa and mastercard...
If that was the case then what was the need to unnecessary introduce a new system.....
B******IT
Click to expand...
Yes what is required is to implement lower MDR for rupay cards compared to visa/mastercard etc. If MDR is very low / nominal like 0.25% or less, more businesses will be encouraged to accept rupay cards.
 
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Fini7777 said:
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?
Click to expand...
Owing to this issue itself shifted to wallet upi’s more than a year back. No use in blaming anyone for anything. As a business owner merchants can do whatever they can to minimize cost, as a government and bank they are obliged to give the best infra to facilitate the same while simultaneously charging for the same to keep it viable, as a customer we are obliged to look for the best ways to make such payments so that we get some rewards apart from the added convenience. Nothing lasts for long.
 
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Small merchants are never gonna accept even 0.01% MDR.

As soon as they know that they aren't getting the exact amount of the payments received in their bank, they change the Merchant QR partner.

As many salesmen are roaming to put the QRs, the Merchant tells them to replace the QR and make sure not a single penny is getting deducted. If that happens, they will again change the QR.

So, the Salesman disables every other payment method and keeps only regular UPI active.

Small merchants have no benefits from accepting payments through CCs, and many times, they do business with very thin margins. So even 0.5% matters a lot for them.

I see scope in the adoption if there are no rewards to customers and no MDR to merchants. It is a win-win situation for everyone. Customers get to use the CC without hurting their bank balance/statements; Merchants get the payments without any processing fees. Banks get the business. (CC users, Interests, Fees, etc.)
 
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Fini7777 said:
Your thoughts on this
@SSV @cardio_guy @NAB @Abhishek012 @BVC @ashwink @Mr. Bean @TechnoFino @Vasuki @jack333 @D₹V @BeingIncog @Cryptopsycho @Everybody @kuchbhi @Anupama_Jha @Pavvan @Raghav2006 @drsel @sidp @b4bhar @ccdc @Tejo @tachniki @shu_sha @2025 @Ram1 @CosmicCat @Subhankar
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I agree with OP, from what I've observed the shops that have both POS and UPI scanners with credit cards enabled prefer POS rather than scan.
There is a medical store in my locality that accepts credit cards without issue even though most people here don't use them hence many times their POS machine isn't charged, I asked them if I should pay using my CC by scan they told me to avoid it as it's costly.

A local kiryana store accepts UPI cards up to rs.2000 but from what I've noticed once I use my one card for 2k I can't use the other one for any amount there and sometimes can't use the same card the same day on some other small merchant.
Due to this once I had to pay 4-5k around 2 months back to a business and when I paid them 1k there were no charges applied so they told me to send the remaining 3-4k. Still, when I did that MDR was charged to them on the whole amount (the 1k I paid before too), and I was told that they're not going to bear that hence I had to pay more money.

Overall, I've been using this Rupay credit card for around 8-10 months and didn't find them very useful as most places these days have POS machines and they prefer to take payments using that and I don't hold any extraordinarily rewarding Rupay card (I have tata neu infinity but now that they have restricted the CB to 0.5% on gpay, it's kinda useless) so even I have started to use a physical card.
 
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Another thing i have noticed is that with PhonePe merchant app we can disable RuPay credit card on upi altogether.
There should be option to enable payments below 2k atleast, but we can either enable or disable the RuPay card irrespective of amount of transaction.
 
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NAB said:
I see scope in the adoption if there are no rewards to customers and no MDR to merchants. It is a win-win situation for everyone. Customers get to use the CC without hurting their bank balance/statements; Merchants get the payments without any processing fees. Banks get the business. (CC users, Interests, Fees, etc.)
Click to expand...
it's true
it's better if they could allow upi payments with cc without any MDR to merchants and 0% return to cust

It may make the merchants enable rupay cc payments atleast
 
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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 -

SilentVoyager

Post in thread 'Payment Gateway MDR Negotiations'

Abhishek012 said:
CC on UPI also same charges ?
Click to expand...
Yes, Rupay CC UPI would attract 1.2% MDR.
  • Hehe
 
Last edited:
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this upi/any other new payment system whether cc or regular upi will only last till it's free/subsidised by govt...the moment some kind of charges are introduced...they'll stop accepting it and go back to cash only....this is India...jab tak free ha tab tak use karo....uske baad back to original payment method...CASH....
 
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Raavan said:
Another thing i have noticed is that with PhonePe merchant app we can disable RuPay credit card on upi altogether.
There should be option to enable payments below 2k atleast, but we can either enable or disable the RuPay card irrespective of amount of transaction.
Click to expand...
Yes, it's a good idea and if implemented this will be a partial solution to this issue
 
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