MDR on RuPay Credit Card via UPI: Rates and Rules

Last updated: 20 September 2026

⚠️ Disclaimer: This page is for informational purposes only and does not constitute financial or legal advice. MDR rates are subject to change. Always verify with your acquiring bank or payment service provider.
⚠️ Important: RuPay debit card = zero MDR (confirmed). RuPay credit card via UPI = MDR applies under credit card guidelines, where rates vary by merchant category (MCC). Ask your acquiring bank for your specific contractual rate schedule.

RuPay Debit Card vs RuPay Credit Card — Key MDR Difference

There is a critical distinction between RuPay debit and credit cards for MDR purposes:

Card TypeMDR StatusFramework
RuPay Debit Card (UPI or POS)Zero MDR ✅PSS Act §10A, govt. mandated — maintained after Oct 2026
RuPay Credit Card via UPIRate varies by MCC (ask acquiring bank)Standard credit card guidelines (NOT the 0.4% UPI MDR framework)

Why Are They Different?

The zero-MDR mandate under the Payment and Settlement Systems Act (Section 10A) specifically covers RuPay debit cards and UPI (person-to-merchant) transactions using bank account balances. Credit cards are a separate financial product — they involve a line of credit extended by the bank, which carries additional costs (credit risk, interest subsidy periods, rewards programmes) that are recovered partly via the MDR.

NPCI has clarified that credit-linked UPI payments — including RuPay credit cards linked to UPI — operate under separate existing credit product guidelines and are not covered by the new 0.4% UPI P2M MDR framework effective October 2026.

Source: Department of Financial Services (general guidance) | Last verified: 20 September 2026

How Does RuPay Credit Card on UPI Work for Merchants?

When a customer uses a RuPay credit card linked to UPI (like an HDFC, SBI, or Kotak RuPay credit card via PhonePe or Google Pay):

  1. The payment is routed through the UPI rail, but the funding source is the customer's credit card
  2. The acquiring bank applies credit card MDR according to your business category code (MCC) and merchant agreement
  3. Applicable GST (if charged by the bank) is deducted on the MDR
  4. Net settlement is credited to the merchant after deductions

What Is MCC and Why Does It Matter?

MCC (Merchant Category Code) is a four-digit code assigned by your acquiring bank that classifies your business type. MDR for credit card transactions is tiered by MCC:

  • Grocery / supermarkets: typically lower negotiated MDR
  • Airlines / hotels: special category agreements
  • General retail: standard commercial rate as agreed with your bank
  • Luxury / jewellery: specific risk-weighted rates

An official blanket rate table for RuPay credit cards on UPI is not publicly published by NPCI, as rates vary by merchant category and acquiring bank. Ask your acquiring bank directly to confirm the exact rate applicable to your business category.

Consumer Impact: Do You Pay More?

No. As a consumer, you do not pay any extra surcharge for using your RuPay credit card via UPI. The MDR is borne by the merchant. Merchants cannot legally pass on the MDR as a surcharge to customers.

You also continue to earn credit card reward points, cashback, or miles on purchases made via UPI using your RuPay credit card, just as you would with a physical card swipe.

What About Non-RuPay Credit Cards on UPI?

Currently, credit cards on UPI are only supported for RuPay network cards (NPCI's own network). Visa and Mastercard credit cards cannot be linked to UPI at present. This may change in the future as NPCI expands its credit-on-UPI offerings.

RuPay Credit Card UPI MDR — FAQs

Is MDR charged on RuPay credit cards used through UPI?
Yes. While standard UPI payments from bank accounts and RuPay debit cards have operated under zero MDR (with 0.4% introducing on standard UPI > ₹2,000 from 15 October 2026), RuPay credit cards linked to UPI are classified as credit card products. Consequently, MDR applies to RuPay credit card UPI transactions per credit card interchange and merchant acquiring guidelines.
What is the MDR rate for RuPay credit card payments on UPI?
The MDR rate for RuPay credit card transactions on UPI is set by the acquiring bank and varies by merchant category, so the merchant should ask their bank. Under NPCI guidelines, small merchants with turnover up to ₹20 lakh and transactions up to ₹2,000 are generally exempt from MDR. For other transactions, merchants should consult their acquiring bank or payment aggregator for their specific contractual rate schedule.
Who pays MDR on RuPay credit card UPI transactions?
The merchant pays the MDR. When a customer pays using a linked RuPay credit card via UPI, the acquiring bank or payment aggregator automatically deducts the applicable MDR (and any applicable GST) from the gross transaction amount before settling the net balance into the merchant's bank account. Customers pay zero extra surcharge.
Is RuPay credit card UPI MDR the same as the 0.4% UPI MDR?
No. The 0.4% UPI MDR (capped at ₹300, effective 15 October 2026) applies strictly to standard person-to-merchant (P2M) payments made directly from savings or current bank accounts. RuPay credit cards on UPI are credit line facilities governed by separate credit card interchange rules and commercial merchant contracts, not the 0.4% bank-account UPI MDR cap.
Which merchants are exempt from MDR on RuPay credit card UPI transactions?
Under NPCI circulars for RuPay credit card linkage on UPI, transactions up to ₹2,000 for small merchants (defined as businesses with an annual turnover up to ₹20 lakh) carry zero MDR. For higher ticket values and larger merchants, standard commercial credit card acquiring terms apply unless specifically negotiated with acquiring banks.
What is the MDR charge for UPI transactions?
For standard bank-account UPI payments effective 15 October 2026: transactions up to ₹2,000 have 0% MDR; transactions above ₹2,000 carry a 0.4% MDR capped at ₹300; essential categories (fuel, telecom, rail, insurance, agri-inputs) pay a flat ₹5 fee; and capital markets pay 0.02% (capped at ₹300). In contrast, RuPay credit cards on UPI follow separate credit card acquiring rates.
How can merchants avoid MDR charges on UPI payments?
Merchants can avoid or minimize MDR charges by: 1) Accepting standard UPI payments of ₹2,000 or less (which are 100% free); 2) Qualifying under the small merchant QR exemption tier (monthly turnover ≤ ₹1 lakh); 3) Accepting RuPay debit cards, which remain permanently zero-MDR under Section 10A of the PSS Act; and 4) Utilizing the NPCI exemption for RuPay credit card transactions up to ₹2,000 for small merchants.
Does RuPay credit card charge a fee when used on UPI?
For consumers, no fee is charged. Customers can make UPI payments using a linked RuPay credit card with zero surcharge, while continuing to earn card reward points and interest-free credit periods. For merchants, acquiring banks deduct the agreed credit card MDR and applicable GST during settlement.
How do the new 2026 UPI rules affect RuPay credit cards?

The new UPI rules taking effect on 15 October 2026 apply to standard bank-account UPI payments, including:

  • Standard P2M: 0.4% MDR on transactions > ₹2,000 (capped at ₹300).
  • Zero MDR threshold: Free for transactions ≤ ₹2,000.
  • Flat ₹5 fee: On essential services (fuel, telecom, rail, insurance, agri-inputs).
  • Capital markets: 0.02% MDR (capped at ₹300).
  • Small QR merchants: Total MDR exemption (turnover ≤ ₹1 lakh/month).
  • RuPay debit cards: Continued 0% MDR under Section 10A of the PSS Act.

RuPay credit cards continue to follow commercial credit card acquiring terms set by acquiring banks.

What is the MDR on RuPay credit cards?
The MDR on RuPay credit cards (whether used via POS card swipe or linked on UPI) is set by the acquiring bank and varies by merchant category, so the merchant should ask their bank. It is distinct from RuPay debit cards, which are legally protected at 0% MDR under Section 10A of the Payment and Settlement Systems Act.

📑 Sources & Regulatory References

Last updated: 20 September 2026. Independent informational guide based on published government and regulatory notifications.