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