The Regulatory Shift
The National Payments Corporation of India (NPCI) has issued a directive requiring all UPI and RuPay member banks and payment service providers (PSPs) to reclassify gift card and voucher purchase transactions under a new dedicated Merchant Category Code (MCC) 7016. This shift mandates a move away from the previous MCC 6540, which was shared with Prepaid Payment Instrument (PPI) wallet top-ups.
Key Operational Changes
- New Classification: All merchants offering gift cards must transition to MCC 7016 by May 31, 2026.
- Transaction Guardrails: Per-transaction limits are capped at Rs 10,000, with a monthly cumulative user limit of Rs 25,000.
- Strict Transaction Logic: Collect requests (merchant-initiated pulls) are prohibited for this category. Additionally, platforms must ensure gift card purchases are processed as separate UPI transactions, distinct from general product/service checkouts.
Market Context and Impact
Historically, the overlap between PPI top-ups and gift card sales hindered regulatory oversight and data hygiene. By enforcing this separation, the NPCI aims to sharpen fraud detection and velocity tracking across the ecosystem. For fintech platforms and e-commerce players, the onus is on coordinating with acquiring banks to audit and reclassify merchant hierarchies to avoid service disruptions.
Takeaway for Founders
Compliance is non-negotiable. Founders operating platforms with gift card verticals should immediately audit their acquiring relationships to ensure the MCC 7016 migration is underway before the May 31 deadline. Failure to comply shifts liability directly to the acquirers and their downstream partners.