Exclusive: NPCI mandates new MCC for UPI Gift Cards, caps per-transaction limit at Rs 10,000

The regulator moves to separate gift card purchases from PPI wallet top-ups under a distinct merchant category code, a change that will force acquirers and PSPs to re-classify their merchant bases.

Inside the move

The National Payments Corporation of India (NPCI) has directed all UPI and RuPay member banks and payment service providers to reclassify gift card and voucher purchase transactions under a new dedicated Merchant Category Code MCC 7016, effective no later than May 31, 2026. Entrackr accessed the directive, which flags a long-standing classification overlap that has complicated transaction monitoring and regulatory reporting across the ecosystem.

Until now, gift card and voucher purchases through UPI were tagged under MCC 6540, the same code used for loading prepaid payment instrument (PPI) wallets. NPCI says this dual-use classification has made it difficult to differentiate and audit the two transaction types separately.

Acquiring banks and PSPs are required to assign MCC 7016 to all merchants offering gift cards or vouchers, both existing and newly onboarded. The deadline for compliance is May 31, 2026. The new code will sit under the 'Non-Industry / Regular Program' category of MCC classification.

The numbers behind the story

NPCI's accompanying annexure sets specific controls acquirers must enforce. Collect requests where a merchant initiates a payment pull will not be permitted under this merchant category. Transaction limits have also been defined: each gift card or voucher purchase via UPI cannot exceed Rs 10,000, and the monthly cumulative spend per user is capped at Rs 25,000.

Platforms that facilitate both product or service purchases and gift card sales cannot bundle the two into a single UPI transaction each must flow as a separate payment. The guidelines extend to aggregators as well, with acquirers remaining liable for compliance failures or mis-categorisation anywhere down the merchant hierarchy.

The reclassification is primarily a hygiene and oversight play. Regulators and NPCI's own analytics systems have long struggled to accurately measure gift card commerce flowing through UPI, since it was indistinguishable from wallet top-ups in transaction data. Clean MCC separation enables better fraud detection, clearer velocity tracking, and sharper regulatory reporting.

What this changes

For fintech platforms and large e-commerce players, many of whom sell gift cards as a core product vertical, the change requires coordination with their acquiring bank or PSP to ensure existing merchant IDs are re-tagged before the deadline. Non-compliance shifts fraud liability squarely onto the acquirer. With less than four weeks to the May 31 deadline, acquirers are expected to move quickly on bulk merchant re-classification projects.

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