New Delhi: The National Payments Corporation of India (NPCI) on Tuesday has announced the decision to defer the implementation of Merchant Discount Rates (MDR) on select Unified Payments Interface (UPI) payments. As per the notification, UPI and Services Steering Committee made the decision keeping in mind the festive season.
“UPI and Services Steering Committee today decided that, keeping in mind the festive season, Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions shall be implemented immediately post Diwali at a date to be notified separately,” NPCI said.
The rollout would take place immediately after Diwali at a date to be announced later.
The newly introduced charges were set to be implemented on October 15, 2026. However, the upcoming weeks are marked by several festive occasion including Durga Puja, Dussehra, and Diwali. Since Diwali is going to be celebrated on November 8, 2026, the rollout may take effect anytime soon after.
The move also triggered a sharp recovery in fintech stocks which rebounded from their intra-day lows following the announcement.
Merchant Discount Rate is a processing fee that a merchant pays for accepting a digital payment.
The government has clarified that customers would not have to bear the cost of the MDR. Person-to-person (P2P) transactions will continue to remain free, while P2M transactions of up to Rs 2,000 will also remain outside the MDR framework. This means consumers will continue to use UPI without paying any transaction charges.
Under the revised UPI framework, transactions of Rs 2,000 or lower would attract zero MDR. Also, transactions covered under the zero-MDR framework for small merchants will remain free. The category covers small vendors receiving up to Rs 1 lakh per month through UPI QR payments directly into their bank accounts. This brings approximately 96 percent of total P2M transactions outside the scope of MDR.
Also, select merchant categories including railways, telecom services, insurance and fuel purchases would attract a flat MDR of Rs 5 on UPI transactions exceeding Rs 2,000.
For P2M transactions of Rs 75,000 and above, the MDR will be capped at Rs 300.
Transactions with the capital market, including stockbroking, mutual funds and securities, would attract 0.02 percent MDR, capped at Rs 300, for transactions above Rs 2,000.
Note that automated recurring payments enabled through e-mandate will remain outside the MDR framework. It may include monthly subscriptions, utility bills, insurance premium etc.
The decision to defer the rollout comes amid heightened industry discussions around the reintroduction of MDR on certain categories of UPI transactions and its likely impact on merchant payments, fintech companies and the digital payments ecosystem.
