Ahead of IPO, NSE Anticipates Short-term Impact on Transaction Volumes Due to UPI MDR Charges

Ahead of the IPO, the National Stock Exchange (NSE) predicts a short-term decline in transaction volumes following the implementation of new Merchant Discount Rate (MDR) charges on UPI payments above ₹2,000. The exchange expects activities to normalise over time, as per The Moneycontrol news report. 

NSE's Perspective on UPI MDR Charges 

As per the report, on September 15, 2026, the Managing Director and CEO of NSE, Ashishkumar Chauhan, addressed concerns regarding the impact of the newly introduced MDR charges on large-value UPI transactions.  

According to Chauhan, the charges set at 0.4% on transactions exceeding ₹2,000 are likely to affect transaction volumes initially.  

However, he believes that these impacts will be temporary as market activities are projected to return to normal levels eventually. 

Details of the MDR Charges 

The government announced that it will charge a 0.4% MDR fee on payments to merchants that exceed ₹2,000, capping fees at ₹300 for transactions of ₹75,000 and above.  

This marks an end to the zero-MDR regime initiated in January 2020, which aimed to facilitate digital transactions. Merchant transactions up to ₹2,000 remain exempt from these charges. 

End of Zero-MDR Regime and Market Reactions 

The previous zero-MDR policy faced criticism from banks and fintech firms, which deemed it unsustainable. With the recent introduction of MDR fees, the NSE acknowledges an initial dip in transaction volumes but holds confidence that normalcy will resume with time.  

This adjustment is a significant shift for large digital merchant payers who are now aligning with the new framework. 

Read More: NSE IPO Price Band Set Between ₹1,700- ₹1,785, With an Issue Size of ₹22,568.94 Crore! 

MDR Impact on Large Digital Merchant Payments 

The MDR implementation introduces a new cost burden on transactions over ₹2,000. By capping the fees for payments over ₹75,000, the policy intends to balance financial sustainability with merchant interests.  

Meanwhile, smaller transactions continue to receive exemptions to encourage digital payments across low-value sectors. 

Conclusion 

As of the first rollout, the new MDR charges on UPI payments above ₹2,000 could reduce NSE transaction volumes short-term but are projected to normalise. The policy adjusts the former zero-MDR framework with charges at 0.4%, influencing the structure of large digital payments. 

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