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Business & Stocks Livemint Markets & Economy • Oct 15, 2026

SEBI Discusses New UPI Merchant Charges With NPCI as Brokers Flag Cost Concerns: MDR and Fee Caps Analyzed

💡 Key Takeaways

•SEBI evaluated proposed UPI merchant discount rates in direct consultations with NPCI.
•A 0.4% MDR is mandated for P2M UPI transactions exceeding ₹2,000.
•High-value settlements of ₹75,000 and above face a strict fee ceiling of ₹300 per transaction.

NEW DELHI [NCRBuzz Wire] — **Regulatory authorities have stepped in to address mounting fiscal friction in India's digital payment ecosystem as SEBI evaluates the financial implications of new merchant transaction fees.** The Securities and Exchange Board of India (SEBI) has held high-level deliberations with the National Payments Corporation of India (NPCI) following sharp representations from financial intermediaries regarding compliance overheads.

### Financial Metrics and Fee Structure

**The newly tabled merchant payment architecture establishes definitive pricing tiers for digital settlements above specific volume thresholds.** Under the framework under review, a Merchant Discount Rate (MDR) of 0.4% is mandated specifically for person-to-merchant (P2M) UPI transactions exceeding ₹2,000. Furthermore, high-value settlements scaling ₹75,000 and above face a strict fee ceiling capped at ₹300 per transaction.

| Metric / Aspect | Details |

|---|---|

| Regulatory Bodies | SEBI and NPCI |

| Transaction Type | Person-to-Merchant (P2M) UPI |

| MDR Charge Rate | 0.4% on transactions above ₹2,000 |

| High-Value Fee Cap | ₹300 per transaction for ₹75,000 and above |

### Industry Stakeholder Concerns

**Stockbrokers and digital financial intermediaries have flagged potential margin erosion resulting from the newly structured merchant fee caps.** Industry participants argue that absorbing these operational overheads could significantly impact profitability margins for high-volume platform aggregators, prompting ongoing consultations between market watchdogs and payment system operators to balance ecosystem growth with sustainable cost models.

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🏛️ Background Context

The discussions follow growing friction between digital financial brokers and payment infrastructure operators regarding the economic viability of zero-fee transaction models versus sustainable merchant discount rates required to maintain robust payment gateways.

💡 Citizen & Commuter Quick Explainer (FAQ)

Q1: What triggered the discussions between SEBI and NPCI?

Discussions were triggered by stockbrokers and financial intermediaries flagging operational cost concerns and potential margin erosion over new UPI merchant fee frameworks.

Q2: What are the specific MDR charges and fee caps introduced?

A Merchant Discount Rate of 0.4% is mandated on person-to-merchant UPI transactions above ₹2,000, with a fee capped at ₹300 per transaction for amounts of ₹75,000 and above.

Q3: What is the current official response and status of the framework?

SEBI has engaged in active deliberations with NPCI to evaluate the financial implications and balance ecosystem growth with sustainable cost models for intermediaries.

Verified Wires: Livemint Markets & Economy Original Wire Dispatch ↗

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