Definition
Merchant Discount Rate (MDR) is the fee merchants pay payment processors and acquiring banks for accepting digital payments. MDR funds infrastructure maintenance, fraud prevention, and ecosystem partner revenue sharing.
Key Points
- 2026-09: India introduces 0.4% MDR on upi P2M above ₹2,000 — first merchant fees since 2020 zero-MDR policy
- ₹300 cap on transactions ≥₹75,000; consumers never charged directly
- Contrast with card interchange (typically 1.5–3%) — UPI MDR positioned as significantly lower
- Only ~4% of UPI merchant transactions affected per Finance Ministry