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The National Payments Corporation of India (NPCI) has deferred implementing the Merchant Discount Rate (MDR) on select Unified Payments Interface (UPI) merchant transactions until after Diwali. This move will give merchants and payment companies more time to prepare for the proposed charges.
The UPI and Services Steering Committee made the decision on Tuesday, October 13, keeping the festive season in mind. The revised implementation date will be announced separately, NPCI said in an official statement.
The proposed charges were earlier scheduled to take effect from October 15, 2026. The postponement comes ahead of the festive shopping period, when consumer spending and digital payment activity typically increase.
According to NPCI, the committee has decided to impose the MDR on selected person-to-merchant (P2M) UPI transactions right after Diwali, with the date to be communicated separately.
The decision came in response to concerns raised by merchant organizations, fintech companies, and other payment companies about imposing charges during the festive shopping season.
Merchant Discount Rate is a fee paid by merchants to banks and payment processors for accepting digital payments. Under the proposed framework, a 0.4% MDR will apply to select P2M UPI transactions exceeding Rs. 2,000.
The charge is intended for specified merchant transactions rather than all UPI payments. Person-to-person (P2P) transfers will remain free, while merchant transactions up to Rs. 2,000 will continue under the zero-MDR framework.
The proposed rules also provide for a maximum MDR of Rs. 300 on transactions of Rs. 75,000 or more. Specified essential-sector transactions above Rs. 2,000, including those involving railways, telecom, insurance, fuel, utilities and education, will attract a flat fee of Rs. 5.
Small merchants collecting up to Rs. 1 lakh per month through existing UPI QR codes will remain covered under the zero-MDR framework.
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NPCI has not specified a fresh date for introducing the charges. The revised timeline will be communicated separately.
The deferment temporarily delays the proposed MDR rollout while merchants and payment service providers prepare for its implementation. Consumers will not be directly charged the MDR under the framework.
The decision comes as the payments ecosystem prepares for increased transaction volumes during the festive season, with the revised implementation schedule still awaited.
