MDR apprehension unlikely to spur higher cash usage: RBI Deputy Governor

Concerns that introducing a Merchant Discount Rate (MDR) would spur a surge in cash transactions are unlikely to materialise, RBI Deputy Governor Shirish Chandra Murmu said on Friday (September 18, 2026), adding that it was only an “initial apprehension”.

From October 15, a 0.4% MDR will apply to person-to-merchant UPI payments above ₹2,000. The charge will be paid by merchants, not consumers, and will be capped at ₹300 for transactions of ₹75,000 or more.

Payments between individuals, as well as the vast majority of everyday merchant payments, will remain free.

“I don’t think that apprehension will come true. It will be just initial apprehension,” Mr. Murmu said while addressing a financial market conclave hosted here by BCC&I on whether more cash would be used because of MDR.