These financial policy shifts have been a major talking point across banking and merchant circles. Here is a closer look at what these changes mean for account holders, depositors, and business owners:
1. SBI Salary Account ATM Limits Revised
What Changed: Effective October 1, 2026, State Bank of India reduced the number of free monthly ATM transactions allowed for salary package account holders at other bank ATMs from 10 down to 5.
Impact: Exceeding this limit invokes cash withdrawal charges (reportedly up to ₹23 plus GST per transaction), making it more critical for salary account holders to stick to SBI's own ATMs or digital channels for frequent cash access.
2. RBI's Bulk Fixed Deposit (FD) Disclosure Norms
What Changed: Starting October 1, 2026, the Reserve Bank of India raised the threshold for bulk deposits to ₹3 crore and above (previously ₹2 crore).
Transparency Mandate: Banks are now required to publish their applicable bulk deposit interest rates daily on their websites by 10:00 AM (with a strict 10-minute grace period). Furthermore, banks must offer uniform interest rates for similar bulk deposits accepted on the same day across all their branches, eliminating arbitrary branch-level variance. Retail FDs below ₹3 crore remain unaffected by these specific scheduling and disclosure overhauls.
3. Upcoming UPI Merchant Discount Rate (MDR) Structure
What Changes: Coming into effect on October 15, 2026, eligible Person-to-Merchant (P2M) UPI transactions exceeding ₹2,000 will attract a merchant discount rate of 0.4%. For high-value commercial transactions of ₹75,000 and above, the fee is capped at a maximum of ₹300.
Consumer Protection: UPI payments remain completely free for end-consumers. Regular customers will not see any hidden fees or MDR added to their bills when scanning and paying. Small merchants falling under specific P2PM categories with monthly collections under ₹1 lakh also maintain zero-MDR benefits, protecting micro-vendors while formalizing larger commercial digital flows.
The introduction of the new Merchant Discount Rate (MDR) structure for UPI transactions—taking effect on October 15, 2026—marks a major shift after nearly six years of a zero-fee regime.
A detailed breakdown examines how this policy impacts business margins, retail operations, and consumer pricing:
1. The Core Mechanics of the New UPI MDR
The Threshold: Person-to-Merchant (P2M) UPI transactions up to ₹2,000 remain completely free of any MDR charges.
The Charge: For P2M transactions exceeding ₹2,000, a baseline MDR of 0.4% applies.
The Cap: To protect large-ticket commercial trades from spiraling costs, the fee is capped at a maximum of ₹300 per transaction (which hits its ceiling at a transaction value of ₹75,000).
Exemptions: All Person-to-Person (P2P) transfers (friends and family transfers) remain 100% free regardless of the amount. Small micro-vendors and street-level shops with lower collection thresholds are also structured to be protected.
2. Impact on Business Margins & Operating Costs
For merchants and business owners, this introduces a direct processing cost that must be factored into profit-and-loss statements:
Small vs. Large Volumes: A local grocery store or neighborhood kirana handling high volumes of small-ticket purchases (under ₹2,000) will see virtually zero impact. However, medium-to-large businesses (such as electronics showrooms, apparel retailers, B2B distributors, or hospitals) collecting high-value digital payments will now account for processing fees much like traditional credit and debit cards.
Ecosystem Distribution: The 0.4% collected is distributed across the payment rails—split among the customer's issuer bank, the merchant's acquiring bank, and the third-party UPI app providers (like Google Pay, PhonePe, or Paytm) to ensure the infrastructure remains financially sustainable for banks.
3. Will Consumers Have to Pay Extra at Checkout?
No Direct Fee for Buyers: Regulatory guidelines explicitly state that MDR is a merchant-side ecosystem charge. Consumers scanning a QR code to pay will not see a surcharge or hidden fee added to their bills.
Anti-Surcharge Rules: Banks and payment operators are under strict instructions to prevent merchants from illegally passing the 0.4% MDR directly onto retail buyers at the point of sale.
4. Special Sectoral Exceptions
Not all businesses fall under the standard 0.4% rule:
Essential / Low-Margin Services: Sectors like telecom, railways, insurance, fuel, and agricultural inputs face a concessional flat fee of ₹5 per transaction for payments above ₹2,000.
Capital Markets: Mutual fund investments, stockbroking, and securities transactions carry a heavily reduced MDR of 0.02% (also capped at ₹300) to safeguard retail participation in financial markets.
Evaluating how the 0.4% UPI Merchant Discount Rate (MDR) on transactions above ₹2,000 impacts a business depends heavily on its average order value (AOV), profit margins, and customer payment habits.
The structural impact on different types of business ventures breaks down as follows:
1. High-Ticket vs. Low-Ticket Retail Ventures
Low-Ticket / High-Volume Businesses (Minimal Impact):
Examples: Grocery stores (Kirana), milk booths, local bakeries, tea stalls, and fast-food counters.
Effect: Because the vast majority of transactions in these stores fall below the ₹2,000 threshold, they remain entirely untouched by the 0.4% fee. Digital transaction flows will continue unhindered without eating into operating margins.
High-Ticket / Low-Volume Businesses (Noticeable Impact):
Examples: Electronics showrooms, apparel stores, furniture outlets, jewelry stores, and hardware suppliers where average bills routinely exceed ₹2,000.
Effect: For a ₹10,000 purchase, a 0.4% MDR amounts to ₹40. For a ₹50,000 transaction, it climbs to ₹200 (nearing the ₹300 per-transaction cap). While this is lower than traditional credit card MDR (which usually ranges from 1.5% to 2.5%), high-volume merchants processing millions in digital payments will now see a measurable chunk of gross revenue go toward payment gateway and banking fees.
2. Behavioral Shifts in Transaction Flows
To mitigate the impact of processing fees, business owners and customers may adapt in specific ways:
The "Splitting Bills" Phenomenon: Customers making purchases just over the ₹2,000 mark (e.g., a ₹2,500 bill) might be tempted to split payments or request alternative methods if they notice merchants getting finicky, though compliance rules prohibit merchants from adding surcharges directly to the bill.
Encouraging Alternative Rails: Merchants with high average order values may subtly pivot toward incentivizing cash or account-to-account net banking transfers for large orders if transaction volume fees start accumulating on their P2M statements.
B2B and Commercial Suppliers: Businesses dealing in wholesale trade or B2B supplies (where transactions easily clear tens of thousands of rupees) will see UPI tracking closer to traditional commercial card expenses. Many will have to bake these processing overheads directly into their pricing models or net operating margins.
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