NPCI has postponed MDR charges on select merchant UPI transactions that were due to begin on October 15.
The rollout will now take place immediately after Diwali, with a fresh date to be announced.
Merchant bodies and payments firms had raised concerns about business costs and consumer sentiment during the festive season.
UPI MDR Charges Won’t Kick In Before Diwali, NPCI Defers Rollout
The rollout of charges on select merchant UPI transactions, earlier scheduled for October 15, has been postponed to a date to be announced separately
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Summary
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The National Payments Corporation of India (NPCI) has deferred the rollout of Merchant Discount Rate (MDR) charges on select Person-to-Merchant (P2M) Unified Payments Interface (UPI) transactions until immediately after Diwali. The new implementation date has not yet been announced.
In a statement on October 13, NPCI said its UPI and Services Steering Committee had decided to postpone the rollout, keeping the festive season in mind. The charges were earlier scheduled to take effect from October 15.
The deferment follows requests from merchant bodies, fintech companies and payments firms to delay the charges, citing concerns about consumer sentiment and the potential impact on businesses during the festive shopping period, according to a Moneycontrol report.
What The MDR Plan Involves
MDR is a fee paid by merchants for processing digital payments. The proposed charges apply to select P2M UPI transactions, which cover payments customers make to businesses for goods and services.
According to earlier reports, the proposed structure includes an MDR of 0.4% on select transactions above ₹2,000. The charges vary by transaction category, and the proposed framework includes specific rates and caps for certain payments.
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The deferment does not mean the proposed charges have been withdrawn. NPCI has said implementation will take place immediately after Diwali, with the exact date to be notified separately.
Why The Rollout Was Delayed
Festive-season sales were a key consideration in the decision. Merchant groups and payments companies had raised concerns that introducing transaction fees during this period could increase business costs and affect the payment experience for customers.
Moneycontrol reported on October 8 that NPCI was considering proposals to postpone the rollout until January 2027. The latest statement confirms a delay beyond the original October 15 date, but does not specify a new date in January or otherwise.
The proposed MDR structure has also drawn attention because UPI is widely used by small merchants and businesses. While card payments typically involve merchant fees, UPI has become a major payment option across India, including in smaller towns and rural areas. How the charges will affect merchants will depend on the final implementation details and the categories of transactions covered.
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