NPCI Defers UPI Merchant Discount Rate Rollout Until After Diwali
The National Payments Corporation of India has postponed the rollout of the Merchant Discount Rate on select UPI transactions until after Diwali.
- Development: NPCI Defers UPI Merchant Discount Rate Rollout Until After Diwali
- Core Takeaway: The National Payments Corporation of India has postponed the rollout of the Merchant Discount Rate on select UPI transactions until after Diwali.
- Context: Primary reporting aggregated across independent newsrooms and verified against CurrentDeck standards.
Shopkeepers and businesses preparing for the festive season received a brief respite after authorities altered the timeline for proposed digital payment fees. The National Payments Corporation of India (NPCI) announced that the implementation of the Merchant Discount Rate on select Unified Payments Interface (UPI) transactions has been postponed. The framework was initially set to launch on October 15, 2026.
NPCI and Steering Committee Delay Rollout Until After Diwali
According to an official statement issued by the National Payments Corporation of India, the UPI and Services Steering Committee met and decided to put the rollout on hold. Citing the peak festive shopping period, the committee elected to push the framework past Diwali. No specific implementation date was announced alongside the postponement, leaving stakeholders waiting for a separate notification.
Financial Framework and Transaction Impact Details
Under the proposed structure, person-to-merchant (P2M) transactions exceeding Rs 2,000 would attract an MDR charge. Government and industry breakdowns show that the vast majority of P2M payments will stay outside the framework, while person-to-person transfers remain entirely free regardless of value.
| Detail | Information |
|---|---|
| Initial Scheduled Date | October 15, 2026 |
| Revised Implementation Timeline | Immediately after Diwali (exact date unannounced) |
| Standard MDR Percentage | 0.4% on select transactions above Rs 2,000 |
| Specific Category Flat Fee | Rs 5 for categories such as railways, telecom, insurance, and fuel |
| Maximum Cap | Rs 300 |
For specific sectors including railways, telecom services, insurance, and fuel, a flat MDR of Rs 5 applies to transactions above Rs 2,000. For larger merchant payments crossing that threshold, a rate of 0.4% applies with a cap of Rs 300. Smaller merchants operating under specific models will continue to pay zero MDR.
Ecosystem Revenue and Consumer Protections
Authorities and participating banks have clarified that the merchant discount rate is designed as a merchant-side charge rather than a direct consumer fee. Banks have advised merchants against passing the cost on to individual users. Individual consumers will face no monthly quotas or caps on free UPI transactions.
Under the framework, a portion of total MDR collections will be allocated to a dedicated fund designed to support digital payment acceptance among small businesses. The remaining revenue is intended to support ecosystem participants, fund infrastructure expansion, enhance cybersecurity, and drive ongoing technological innovation across India's digital payment architecture.
Frequently Asked Questions
When will the MDR on UPI transactions now take effect?
The NPCI stated that the MDR on select P2M UPI transactions will be implemented immediately post Diwali on a date to be notified separately.
Will individual customers have to pay the MDR charge?
No, the MDR is a merchant-side charge, and banks have advised merchants not to pass the cost on to customers.
With the festive shopping season underway, stakeholders await the official notification from the National Payments Corporation of India detailing the exact post-Diwali rollout date for the revised fee structure.
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