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 -

 

[panchabhut]

Had an interesting experience today.
Went for annual service of my car. Gave my TN Rupay card to swipe for 9.7 K. They had ICICI POS. The person said sir can you pl give visa or mastercard, for rupay card the bank charges 2% extra but for visa/mastercard its part of the flat monthly charge paid to the bank.

 

[kuchbhikuchbhi is verified member.]

Had an interesting experience today.
Went for annual service of my car. Gave my TN Rupay card to swipe for 9.7 K. They had ICICI POS. The person said sir can you pl give visa or mastercard, for rupay card the bank charges 2% extra but for visa/mastercard its part of the flat monthly charge paid to the bank.

Part of flat money charge means?

 

[Abhishek012]

Had an interesting experience today.
Went for annual service of my car. Gave my TN Rupay card to swipe for 9.7 K. They had ICICI POS. The person said sir can you pl give visa or mastercard, for rupay card the bank charges 2% extra but for visa/mastercard its part of the flat monthly charge paid to the bank.

The flat monthly charge is also applicable for RuPay credit card swipes.

Everyone's getting confused with RuPay credit card UPI MDR.

Many people don't understand the difference between direct RuPay credit card swipes and RuPay credit card UPI.

The real irony is when many merchants go as far as saying they'll even accept Amex and Diners Club, but not RuPay credit cards, because it incurs MDR charges. LOL.

A guy was telling me that he showed a merchant how Amex and Diners Club deducted 3%+GST from their merchant account.

And do you know what the merchant said to him?

The merchant replied, 'Amex and Diners Club charge 3%+GST as their fee from us but with RuPay credit cards, the Indian govt takes 1.65%+GST, which causes us losses.

That merchant couldn't understand that 3%+GST is also a loss, and the 1.65%+GST for RuPay credit cards is a fee taken by the RuPay company, not the Indian govt. Most importantly, he couldn't grasp that the 3%+GST charged by Amex and Diners Club is also causing a loss.

 

[Abhishek012]

Part of flat money charge means?

ICICI - https://www.icicibank.com/business-banking/cash-management-services/eazypay-schedule-of-charges

If you read carefully, it says: 'Merchant Discount Rate (MDR) of 1.90% plus GST is charged to merchants on collections through RuPay Credit Card on UPI payments.'

But nowhere does it say that if you swipe a RuPay credit card directly, you will be charged more.

The charges for all consumer credit cards/premium credit cards are the same, whether it's Visa, Mastercard, or RuPay.

Merchants are just confused about the MDR difference between RuPay credit card swipes and RuPay credit card UPI.

@panchabhut

 

[panchabhut]

ICICI - https://www.icicibank.com/business-banking/cash-management-services/eazypay-schedule-of-charges

If you read carefully, it says: 'Merchant Discount Rate (MDR) of 1.90% plus GST is charged to merchants on collections through RuPay Credit Card on UPI payments.'

But nowhere does it say that if you swipe a RuPay credit card directly, you will be charged more.

The charges for all consumer credit cards/premium credit cards are the same, whether it's Visa, Mastercard, or RuPay.

Merchants are just confused about the MDR difference between RuPay credit card swipes and RuPay credit card UPI.

@panchabhut

Then it is the failure on part of NPCI to educate people adequately. NPCI works in a very non-transparent way, leading to all these confusions.
But I have used the same card at same merchant earlier. So they must have changed their stand based on their past experience only.

 

[panchabhut]

Part of flat money charge means?

Some banks negotiate with merchants to have a flat charge instead of per txn charge. It works out cheaper for the merchant where total txn is more.

 

[Abhishek012]

Then it is the failure on part of NPCI to educate people adequately. NPCI works in a very non-transparent way, leading to all these confusions.
But I have used the same card at same merchant earlier. So they must have changed their stand based on their past experience only.

It’s possible that many customers paid using RuPay Credit Card UPI and higher charges were applied in such cases.

Many customers and merchants get confused between RuPay CC swipe and RuPay CC UPI.

You might have seen offline merchants and some customers saying on online forums that RuPay Credit Card is no longer accepted in many places. Some people even posted pictures showing some boards put up by merchants stating, "RuPay Credit Card is not accepted," while the same merchants accept Visa/Mastercard credit cards via POS machines.

But before speaking, they didn't think they are talking about RuPay CC UPI, not RuPay CC swipe and that’s the thing that stays in their minds.

The reality is simply this: the MDR charges for RuPay Credit Card via UPI were higher, which is why the merchants wrote that notice.

However, if you swipe the RuPay Credit Card on the POS machine, the merchant would be charged the same MDR as they would for Visa/Mastercard credit cards.

This has caused a lot of confusion between customers and merchants.

@panchabhut Next time when you go to that merchant, tell them that swiping a RuPay credit card will have the same charges, but RuPay credit card UPI incurs higher charges. See what they say then.

By the way, note down the shop's name and the swipe machine's model number & POS machine bank name and file a complaint on Twitter. The RuPay and ICICI teams will also investigate the issue.

 

[Fini7777]

It’s possible that many customers paid using RuPay Credit Card UPI and higher charges were applied in such cases.

Many customers and merchants get confused between RuPay CC swipe and RuPay CC UPI.

You might have seen offline merchants and some customers saying on online forums that RuPay Credit Card is no longer accepted in many places. Some people even posted pictures showing some boards put up by merchants stating, "RuPay Credit Card is not accepted," while the same merchants accept Visa/Mastercard credit cards via POS machines.

But before speaking, they didn't think they are talking about RuPay CC UPI, not RuPay CC swipe and that’s the thing that stays in their minds.

The reality is simply this: the MDR charges for RuPay Credit Card via UPI were higher, which is why the merchants wrote that notice.

However, if you swipe the RuPay Credit Card on the POS machine, the merchant would be charged the same MDR as they would for Visa/Mastercard credit cards.

This has caused a lot of confusion between customers and merchants.

@panchabhut Next time when you go to that merchant, tell them that swiping a RuPay credit card will have the same charges, but RuPay credit card UPI incurs higher charges. See what they say then.

By the way, note down the shop's name and the swipe machine's model number & POS machine bank name and file a complaint on Twitter. The RuPay and ICICI teams will also investigate the issue.

But many small merchants don't use/have POS machines right!

It'd have been better if NPCI standardize the MDR across all platforms like phonepe, bharatpe etc to a low MDR let's say equal to MDR charged on Rupay cc swipe but they didn't

The main USP of Rupay cc is scan & pay facility and many ppl apply rupay cc for this reason otherwise everyone can swipe their VISA/MC/AMEX network cards to pay the merchants

Yes, there's a bit confusion to merchants and it's true that MDR a bit high on UPI TXNS.
Sadly out of 10 only 2-3 are accepting rupay cc in my area now.

 

[Abhishek012]

But many small merchants don't use/have POS machines right!

It'd have been better if NPCI standardize the MDR across all platforms like phonepe, bharatpe etc to a low MDR let's say equal to MDR charged on Rupay cc swipe but they didn't

The main USP of Rupay cc is scan & pay facility and many ppl apply rupay cc for this reason otherwise everyone can swipe their VISA/MC/AMEX network cards to pay the merchants

Yes, there's a bit confusion to merchants and it's true that MDR a bit high on UPI TXNS.
Sadly out of 10 only 2-3 are accepting rupay cc in my area now.

In India, more than card networks, companies and banks set their own MDR because that's their USP.

If all companies start offering the same MDR, it will lead to a monopoly for a few companies.

One thing is that MDR rates also depend on merchant categories. Merchants need to be educated to ensure they are not registered under an incorrect business category, which could result in higher MDR charges.

Apart from that, merchant acquisition for RuPay Credit Card UPI is still ongoing. It will only become clear in the next 5 years how many merchants actually accept RuPay Credit Card UPI.

 

[panchabhut]

@panchabhut Next time when you go to that merchant, tell them that swiping a RuPay credit card will have the same charges, but RuPay credit card UPI incurs higher charges. See what they say then.

By the way, note down the shop's name and the swipe machine's model number & POS machine bank name and file a complaint on Twitter. The RuPay and ICICI teams will also investigate the issue.

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.

 

[desiviru]

This is very correct.. here the oversmart guys are defeating the system.. I too observed many times

To make them (smart guys) regret their decision what Govt/NPCI can do is send emails/communication to those who kept the option active and reward them handsomely. The news will be spread like a fire after some people start receiving rewards for past months. Then these will regret as to why they disbaled it. 🤣 To bring someone on line, you have to make them regret by such things.

Like many didn't went for RuPlat cards only to regret later when offer extended for 6 straight yrs. Rupay har saal kehta tha, ab toh lo ge card....