Fees, Price Drivers and 2026 Rules
Debit card MDR caps in India: the RBI limits for small and other merchants, terminal and QR
The RBI ceiling on MDR for debit cards other than RuPay, the ₹20 lakh small-merchant tier, terminal versus QR caps, how to check your statement and what to do if you are overcharged.
For debit cards other than RuPay, the RBI caps the MDR a bank may charge a merchant. Under the RBI's rationalisation of MDR for debit card transactions, effective 1 January 2018, merchants with turnover up to ₹20 lakh in the previous financial year may be charged no more than 0.40% (maximum ₹200 per transaction) on terminals and online, and 0.30% (maximum ₹200) on QR acceptance. Other merchants may be charged no more than 0.90% (maximum ₹1,000) on terminals and online, and 0.80% (maximum ₹1,000) on QR. The RBI's page for these instructions carries no note that they have been superseded, and the DFS/NPCI FAQ of September 2026 still describes debit card MDR as "capped up to 0.90%". RuPay debit cards are separately free to accept by law. This guide explains the caps and how to check you are within them. It belongs to the fees overview.
The caps
| Merchant category | Terminal (POS) and online card payments | QR-code based card acceptance |
|---|---|---|
| Small merchants (turnover up to ₹20 lakh in the previous financial year) | Up to 0.40%, cap ₹200 per transaction | Up to 0.30%, cap ₹200 per transaction |
| Other merchants (turnover above ₹20 lakh) | Up to 0.90%, cap ₹1,000 per transaction | Up to 0.80%, cap ₹1,000 per transaction |
These are ceilings, not standard prices. A bank may charge less. The same RBI instructions told banks to ensure that merchants do not pass MDR on debit cards to customers.
When the per-transaction cap bites
For a larger merchant, 0.90% of a payment reaches ₹1,000 at ₹1,11,111. Above that, the MDR may not exceed ₹1,000.
| Debit card payment (other merchant, terminal) | 0.90% | Maximum MDR allowed |
|---|---|---|
| ₹10,000 | ₹90 | ₹90 |
| ₹50,000 | ₹450 | ₹450 |
| ₹1,00,000 | ₹900 | ₹900 |
| ₹2,00,000 | ₹1,800 | ₹1,000 (cap) |
For a small merchant, 0.40% reaches ₹200 at ₹50,000. A small merchant selling a ₹75,000 appliance on a Visa debit card would pay at most ₹200, not ₹300.
Which debit cards are covered
| Debit card | Rule |
|---|---|
| RuPay debit | No charge allowed (PSS Act s.10A; S.O. 5067(E) of 14 Sept 2026). See zero charge |
| Visa, Mastercard or other network debit | RBI caps above |
| Prepaid cards and gift cards | Not debit cards; PPI rules and your agreement apply |
| Credit cards | No RBI cap; see MDR explained |
Worked example: checking a statement (illustrative)
A clothing store (turnover above ₹20 lakh) receives this extract from its acquirer:
| Card | Payment | MDR charged | Within cap? |
|---|---|---|---|
| Visa debit, terminal | ₹4,000 | ₹36 (0.9%) | Yes |
| Mastercard debit, terminal | ₹12,000 | ₹120 (1.0%) | No: maximum is ₹108 |
| RuPay debit, terminal | ₹6,000 | ₹0 | Yes |
| Visa debit, QR | ₹3,000 | ₹27 (0.9%) | No: QR cap is 0.8%, maximum ₹24 |
| Visa credit, terminal | ₹8,000 | ₹144 (1.8%) | Not capped |
Two lines are above the cap. A common cause is a debit card being processed under a credit or "premium" rate, or a QR card payment mapped to the terminal rate. Raise it in writing with the transaction IDs.
Which turnover counts
The small-merchant tier refers to turnover up to ₹20 lakh in the previous financial year. In practice the acquirer classifies you when it onboards you, usually from the information you give. If your turnover has fallen below ₹20 lakh, or if you were classified wrongly, ask your acquirer to review your category. Keep your GST returns or accounts ready as evidence.
What to do if you are overcharged
- Download the transaction-level report for the period.
- Mark each debit card transaction that exceeds the cap, with the amount over.
- Write to your acquirer's merchant support, then its grievance or nodal officer if needed, asking for correction and refund.
- Escalate to the RBI's complaint management system if the bank or authorised payment system operator does not resolve it within the time set in the Reserve Bank – Integrated Ombudsman Scheme. Check eligibility for business complaints on the RBI site.
- Fix the cause: ask for the rate card to be corrected so it does not recur.
Why caps still matter in 2026
- Many customers pay with Visa or Mastercard debit cards, and for those cards the cap is your protection.
- The 2026 UPI MDR changes did not change debit card caps.
- For larger tickets, a capped debit card payment can be cheaper than an uncapped credit card payment by a wide margin. For example, ₹1,50,000 on a debit card costs at most ₹1,000; at an illustrative 1.8% on a credit card it costs ₹2,700.
FAQ
Do the caps apply to online debit card payments through a gateway?
The RBI table applies the terminal caps to "physical POS infrastructure (including online card transactions)". Gateways may add separate service charges; ask how they are described.
Can I charge the customer the debit card MDR?
The RBI instructions say banks must ensure merchants do not pass debit card MDR to customers. See the surcharge guide.
Does GST apply on top of the capped MDR?
GST is generally charged on the MDR, and the cap is on MDR itself. See GST on MDR.
Are international debit cards covered?
The caps were set for the domestic framework. Ask your acquirer how international debit cards are priced.
Sources
- Reserve Bank of India — Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions (December 2017, effective 1 January 2018)
- RBI Complaint Management System — complaints against regulated entities
- Department of Financial Services — UPI MDR FAQ comparing UPI and card MDR
