UPI charges: NPCI postpones MDR rollout on select transactions after Diwali

The National Payments Corporation of India (NPCI) on Tuesday, October 13 deferred the implementation of Merchant Discount Rate (MDR) on select Unified Payments Interface (UPI) transactions until after Diwali, citing the festive season. The exact date of implementation will be announced separately, according to an NPCI release dated October 13.

The decision was taken by the UPI and Services Steering Committee, which said the charges on select person-to-merchant (P2M) transactions would come into effect immediately after Diwali. The proposed rollout was earlier scheduled for October 15.

The postponement follows reports that NPCI was considering requests from merchant bodies, fintech firms and payment companies to delay the implementation. Industry stakeholders had raised concerns over the timing of the proposed charges, particularly during the festive shopping season, when digital payment volumes typically increase.

A Moneycontrol report had earlier indicated that NPCI was considering deferring the rollout until January 2027 amid concerns over the potential impact on merchants and consumers.

The proposed framework includes an MDR of 0.4% on select UPI transactions above Rs 2,000. Under this rate, a transaction worth Rs 10,000 would attract a charge of Rs 40.

MDR is a fee charged to merchants for accepting digital payments. Its applicability and the final cost to businesses depend on the terms of the payment arrangement and the transactions covered under the framework.

Industry stakeholders had also flagged a lack of clarity over the proposed charges, including which transactions would attract MDR and whether different rates would apply to different merchant categories.

The delay gives businesses and payment service providers additional time ahead of the revised rollout. However, NPCI's October 13 release did not specify the transactions covered in detail or provide a definitive implementation date.

The committee said the charges would be introduced immediately after Diwali, with the date to be notified separately.