UPI MDR Charges on Select Merchant Payments Deferred Until After Diwali, Says NPCI

The National Payments Corporation of India (NPCI) has postponed the Merchant Discount Rate (MDR) rollout on select Person-to-Merchant (P2M) Unified Payments Interface (UPI) transactions until after Diwali.  

As per news reports, the decision was announced on Tuesday, October 13, 2026. The rollout was scheduled to begin on October 15, 2026.  

NPCI noted that its UPI and Services Steering Committee decided to defer the implementation, citing the festive season. The revised date will be announced separately. 

MDR of 0.4% on Select Transactions 

Last month, the government allowed MDR to be charged on select merchant transactions. Under the proposed structure, transactions above ₹2,000 would attract a fee of 0.4%. 

The reported framework also included a maximum charge of ₹300 for transactions of ₹75,000 and above. A flat fee of ₹5 was proposed for select categories. NPCI has not confirmed whether these rates or transaction limits will change following the postponement. 

MDR is a fee charged for processing merchant payments through digital payment systems. The proposed charges cover selected P2M UPI transactions, which involve payments made by customers to businesses. 

RBI Governor Comments on MDR 

On October 7, Reserve Bank of India Governor Sanjay Malhotra said a small MDR fee was unlikely to have a major effect on UPI transaction volumes. 

Speaking to reporters at the RBI headquarters in Mumbai, he said there had been no decline in transaction volumes at that point. He also said he did not expect a small fee to significantly affect payment activity. 

Implementation Date Yet to Be Announced 

The deferment means the proposed charges will not take effect on October 15 as originally scheduled. NPCI's announcement did not provide a specific date for implementation after Diwali. 

The postponement does not amount to a cancellation of the proposed MDR. The charges remain planned for select P2M UPI transactions, with the final implementation date still pending. 

Read More: IMF Raises India’s GDP Growth Forecast to 7% for FY27! 

Conclusion  

Merchants and payment service providers are awaiting further details from NPCI on the rollout. The corporation has yet to issue an update confirming any changes to the proposed rates, transaction thresholds, or other terms. 

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