The National Payments Corporation of India (NPCI) has directed all UPI and RuPay member banks, payment service providers (PSPs), and acquiring banks to introduce a new Merchant Category Code (MCC 7016) specifically for gift cards and vouchers purchased through UPI, in a move aimed at tightening transaction monitoring and regulatory oversight.
According to the directive accessed by Entrackr, the new classification must be implemented by May 31, 2026.
Until now, gift card and voucher transactions were processed under MCC 6540, the same category used for prepaid payment instrument (PPI) wallet top-ups. NPCI noted that this overlap created challenges in distinguishing between wallet loading and gift card commerce, complicating audit trails, fraud detection, and transaction reporting across the ecosystem.
What Changes Under the New Rules
Under the revised framework, all merchants selling gift cards or vouchers both existing and newly onboarded must now be tagged under MCC 7016, classified under the “Non-Industry / Regular Program” category.
NPCI has also introduced operational restrictions for this category:
- Per-transaction limit capped at ₹10,000
- Monthly cumulative limit capped at ₹25,000 per user
- Collect requests will not be allowed under this MCC
- Gift card purchases cannot be bundled with regular product purchases in a single UPI transaction
The regulator has also clarified that aggregators and platforms offering both commerce and gift card sales must process them as separate payment flows.
Impact on Fintechs and Merchants
The move will require significant merchant reclassification efforts by acquiring banks and PSPs, especially for large e-commerce and fintech platforms where gift cards form a major product category.
NPCI has placed compliance responsibility squarely on acquirers, making them liable for any fraud, misclassification, or operational lapses within the merchant hierarchy.
The decision is seen as part of a broader push to improve fraud monitoring, transaction velocity tracking, and regulatory transparency across India’s rapidly expanding digital payments ecosystem.
With less than a month remaining before the implementation deadline, banks and payment companies are expected to begin large scale merchant migration and compliance updates immediately.
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