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?

 

[raghumahajan]

We all do exploit these features.
During the painting of my house, I paid around 50000 to shop on Paytm by paying 2K daily. He is happy with no charges, and so am I. 😵

 

[Fini7777]

In my opinion, we all members aware merchants of 2K limit and help them set the same, it is easy.
I try to reach out actual owner and explain the charges and free limits. They are very happy to learn and turn on 2k limits.

Also, I guide merchants with POS on how they can generate QR on their machines.

Good initiative .

 

[Jkt]

MDR is a must for an Unsecured Credit Product!
Govt to promote Rupay, enabled it on UPI rails and introduced MDR for transactions over Rs 2000.
Everyone in the UPI ecosystem, was waiting for some MDR, start charging arbitrary rates, some times higher than MC, Visa!
Merchants who are used to get full payments from UPI, suddenly are in a shock, so they start blocking Rupay CC on UPI.
Same merchant would happily accept a normal CC transaction through POS, why, blame it on human psychology!

Say you are in a shop and took your mobile out, scan the QR code and noticed that CC is not enabled for the payment, in all probability you would switch to a Bank account and complete the transaction. In a rare case, you would close the mobile and present the card. This way the merchant saves MDR, every penny saved is a penny earned!

In addition, because of Zero MDR many folks have been misusing the Rupay CC, many in the forum itself are doing money rotation in lakhs. Someone has to pay for the system to run!

 

[Jkt]

We all do exploit these features.
During the painting of my house, I paid around 50000 to shop on Paytm by paying 2K daily. He is happy with no charges, and so am I. 😵

lucky you that your card was not blocked! there were cases in the past where continuous 2k transactions resulted in blocking of the card!

 

[raghumahajan]

lucky you that your card was not blocked! there were cases in the past where continuous 2k transactions resulted in blocking of the card!

Me and my brother were alternating mostly

 

[Abhishek012]

In my opinion, we all members aware merchants of 2K limit and help them set the same, it is easy.
I try to reach out actual owner and explain the charges and free limits. They are very happy to learn and turn on 2k limits.

Also, I guide merchants with POS on how they can generate QR on their machines.

Not all merchant apps has limit to set limit for Rupay Credit cards to 2K.
Gpay don't have it, but paytm is default on up to 2K

GPay also has a limit for accepting RuPay Credit Card UPI payments below ₹2,000. I saw a screenshot of it somewhere.

The merchant also needs to be educated not to rotate money unnecessarily.

Free MDR has been provided for genuine business transactions.

If a customer says, "I'll pay 2,000 and you give me cash," even if the customer says, "You can keep ₹10 or ₹20," such practices should not be followed.

Another thing to educate the merchant about is to keep QR codes from 2-3 different merchant QR companies. This way, a single merchant QR won't receive excessive credit card on UPI payments.

 

[cardio_guycardio_guy is verified member.]

Me and my brother were alternating mostly

I almost always everytime read your name as raghuram rajan
There is one more member @akiratoriyama i always read your name as arokia mata.

Time to check my eyes 👀

 

[knight]

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

Industry expects around Rs 600 crore loss as government nixes RuPay subsidy - The Economic Times

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.

m.economictimes.com

I was thinking about writing a post on this, but will post this here as this is a related thread.

Seems like the Government has decided to reduce the subsidy on Rupay, including Zero MDR on Rupay Debit card and UPI Transactions.
They have allocated only 1500 Cr, compared to 3681 Cr last year. The industry expectation was 5500 Cr.

This may cause a shift in the preferential treatment and benefits.
And also, may affect Phonepe and other apps allowing zero MDR on Rupay DC.

 

[Abhishek012]

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

Industry expects around Rs 600 crore loss as government nixes RuPay subsidy - The Economic Times

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.

m.economictimes.com

I was thinking about writing a post on this, but will post this here as this is a related thread.

Seems like the Government has decided to reduce the subsidy on Rupay, including Zero MDR on Rupay Debit card and UPI Transactions.
This may cause a shift in the preferential treatment and benefits.
And also, may affect Phonepe and other apps allowing zero MDR on Rupay DC.

ZERO MDR is not good thing.

Only Small offers on RuPay cards are available because of ZERO MDR like Amazon, Swiggy 20% off etc.

Cards like HDFC Platinum, Millennia Debit Card, HDFC Infiniti Debit Card, Axis Burgundy Debit Card, HSBC Salary Debit Card and ICICI Sapphiro Debit Card are not seen (or offered) because the govt has kept ZERO MDR for the last 5 years.

IDFC's Select, Wealth, and Private Debit Cards do not directly come in RuPay as primary card because of Zero MDR.

Today i tweet this -