The planned UPI MDR rollout on select merchant transactions above Rs 2,000 has been deferred until immediately after Diwali, the National Payments Corporation of India’s UPI and Services Steering Committee has announced. The revised implementation date will be notified separately.
The decision means merchants will not face the proposed merchant discount rate during the festival season, when retail activity and digital payments typically increase. It follows demands from trade bodies and merchant associations, which had sought a January implementation and argued that introducing the fee during the festive period could raise business costs and weigh on sales.
The MDR framework was approved and notified by NPCI on September 15. It proposed a 0.4% charge on eligible person-to-merchant UPI transactions above Rs 2,000, with the charge capped at Rs 300 for transactions of Rs 75,000 and above. The framework was scheduled to take effect on October 15, giving banks, payment aggregators and other participants one month to make operational changes.
The committee’s announcement does not specify a new calendar date. It states that the framework will come into effect immediately after Diwali. A revised rollout was earlier expected to be pushed to January 2027, according to people aware of discussions cited in previous reporting, but the latest announcement indicates an earlier implementation after the festival period.
The proposed MDR would apply only to specified person-to-merchant transactions. Payments of up to Rs 2,000 and eligible small merchants were expected to remain free. About 96% of person-to-merchant transactions were expected to be unaffected under the framework, according to the information provided by NPCI and reported by The Times of India.
UPI has operated with effectively zero MDR for more than six years. The proposed framework was intended to create a revenue stream for banks, payment aggregators and other participants in the payments ecosystem. The deferment therefore postpones the planned change in how parts of the UPI network are funded, while keeping the existing payment-cost structure in place through the festival season.
For merchants, the immediate effect is that the proposed transaction charge will not begin on October 15. Payment companies and banks also have additional time to prepare their systems and operational processes before the framework takes effect. The final implementation date remains pending a separate notification from the relevant authority.
