The UPI MDR rollout may be deferred from October 15 to January 1, according to a report cited by Economic Times, potentially giving retailers more time before merchant discount rates apply to eligible Unified Payments Interface transactions. A decision is expected in the next few days, the report said, citing sources and a Business Standard report.
The proposed delay follows concerns from traders and industry associations that introducing the charge during the festive sales period would increase transaction costs for businesses. Members of the UPI and Service Steering Committee, headed by the National Payments Corporation of India (NPCI), met on Wednesday to discuss the timing of the rollout and related issues, according to the report.
Under the proposal previously announced by NPCI, a 0.4% MDR would apply to select person-to-merchant UPI transactions above Rs 2,000. Transactions up to Rs 2,000 would remain exempt, and the report said that exemption would continue even if the rollout is deferred.
The committee is also considering expanding the exemption for smaller businesses. Businesses with annual turnover of up to Rs 40 lakh could be excluded from the MDR, compared with the earlier framework under which businesses with monthly turnover of up to Rs 1 lakh were to be exempt, the report said. The proposed change would affect how smaller retailers absorb or avoid payment-related costs under the new framework.
The potential delay has already affected listed payment aggregators. Paytm shares fell 10% soon after the report, briefly reaching the lower circuit at Rs 1,558.80 per share. The decline reduced Paytm’s market capitalisation by nearly Rs 10,972 crore within minutes of the market opening and took it below Rs 1 lakh crore, according to the report.
Mobikwik shares fell more than 8% to Rs 234.52, while Pine Labs shares declined as much as 8% before recovering some ground. The market reaction reflects the importance of MDR-related rules for payment companies whose business models are linked to merchant transactions and payment services.
The proposed change follows protests by wholesale traders and retailers, including a “No UPI Day” observed earlier this month against the introduction of MDR on UPI payments above Rs 2,000. Retailers have argued that the timing of the charge could raise costs during a period of high transaction volumes.
The MDR was earlier scheduled to come into effect on October 15. The next decision is expected from the ongoing consultations involving the UPI and Service Steering Committee, with the report indicating that the proposed January 1 start and wider small-business exemption remain under consideration.
