UPI Credit Card Bill Payments: The new UPI Merchant Discount Rate (MDR) rules have raised questions for people who use UPI to clear their credit card bills. The new system will start from October 15, 2026. Under it, regular merchant UPI payments above Rs 2,000 will have a 0.4% MDR. But credit card bill payments have been kept under a separate category.
This means paying a credit card bill through UPI won’t simply attract the regular 0.4% charge. Credit card dues are included in a special flat-fee category where merchants receiving such payments can face an MDR of Rs 5 per transaction. The list also includes services such as rail tickets, telecom, fuel, insurance, utility bills, education and tax payments.
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Will Credit Card Users Have to Pay MDR?
For customers, the important part is that the MDR isn’t supposed to be charged directly to them. The Finance Ministry has “advised” banks to make sure merchants don’t pass the MDR cost to customers. UPI app providers are also not allowed to add platform fees or hidden charges for UPI payments.
So, a person paying a Rs 20,000 credit card bill through UPI shouldn’t suddenly see Rs 80 added as MDR. The 0.4% rate used for normal merchant payments doesn’t work this way for credit card dues.
Amresh Acharya, MD & CEO of Loylty Rewardz, said, “For a customer using their credit card on UPI, nothing changes. The customer was never charged to begin with, and that remains the case. Whether someone prefers a credit card for points, the credit float, or anything else, that is their choice, and the UPI MDR framework does not affect it at all.”
Siddharth Maurya, Managing Director, Vibhvangal Anukulara, said, “NPCI places credit card bill payments inside UPI. But it does not set a consumer MDR for them.”
How Does UPI Credit Card Bill Payment Work?
A credit card bill paid through UPI may be processed through the Bharat Bill Payment System (BBPS). This is different from a simple bank-to-bank UPI transfer. BBPS connects the payment platform with the credit card company or other biller and handles settlement.
Because of this, a payment platform or BBPS participant may have its own convenience or processing fee. Such a charge isn’t the same as UPI MDR.
Siddharth Maurya explained “In BBPS, participating firms may charge fees under their own commercial terms. NPCI’s rules treat paying a credit card bill through BBPS as a valid use case,” adding, “But it would not be the UPI MDR.”
What Changes From October 15?
For normal person-to-merchant UPI payments above Rs 2,000, the MDR will be 0.4% and will be capped at Rs 300 for transactions of Rs 75,000 or more. Payments between individuals will remain free. Small merchants receiving up to Rs 1 lakh per month through UPI QR codes will also remain outside the MDR system.
Credit card bill payments are in the Rs 5 flat-fee category rather than the standard 0.4% category. The charge is part of the merchant-side payment ecosystem and isn’t meant to become a direct UPI fee for customers.
UPI also remains “completely free for all person-to-person transactions, irrespective of the amount transferred”, according to NPCI. The new MDR framework is mainly aimed at selected commercial payments and doesn’t turn normal UPI transfers between people into paid transactions.
