The National Payments Corporation of India (NPCI) has postponed the introduction of merchant discount rate (MDR) charges on select Unified Payments Interface (UPI) transactions until after Diwali. The decision comes just two days before the proposed 15 October deadline, giving merchants more time before the new charges take effect.
NPCI has not announced a revised implementation date yet. The new date will be communicated separately.
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In a statement, NPCI said the UPI and Services Steering Committee had decided to defer MDR on select person-to-merchant (P2M) transactions, keeping the festive season in mind. The organisation also clarified that the proposed MDR structure would remain unchanged.
The decision offers temporary relief to retailers and businesses that rely on UPI payments during the festive shopping period.
What Is UPI MDR and How Will the Charges Work?
Merchant discount rate (MDR) is a fee paid by a merchant to the bank and payment service providers involved in processing a digital payment. The proposed charges will apply to select UPI payments made to merchants, rather than all UPI transactions.
Under the proposed structure, UPI transactions above Rs. 2,000 will attract an MDR of 0.40%, subject to a maximum charge of Rs. 300. Certain merchant categories, including bill payments, fuel and education, will instead attract a flat fee of Rs. 5.
The charges are intended for eligible merchant transactions. Ordinary person-to-person UPI transfers are not covered by this proposal.
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Although the implementation has been postponed, NPCI has indicated that the charges will be introduced shortly after Diwali. There is no confirmed date for their rollout at present.
Why Has NPCI Postponed UPI MDR Charges?
The deferment comes during one of India’s busiest retail periods, when consumers and businesses rely heavily on digital payments for shopping, travel and other purchases.
Introducing additional payment costs during the festive season could have added to merchants’ expenses. NPCI’s decision gives businesses some breathing room while they prepare for the proposed changes.
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Before the announcement, there had been discussions about delaying the rollout until 1 January 2027. However, NPCI’s latest statement points to implementation after Diwali, with the exact date still to be announced.
The proposal has also faced opposition from retail traders’ associations. Traders had called for a ‘No UPI Day’ on 2 October to protest against the proposed charges. They later withdrew the plan following a meeting with Finance Minister Nirmala Sitharaman last month.
UPI Transactions Reach Record Daily Average in September
The MDR decision comes as UPI continues to handle a growing number of digital payments across India. UPI recorded an average of 802 million transactions a day in September, with an average daily transaction value of Rs. 97,913 crore.
According to the reported figures, transaction volume reached 24.07 billion in September, up 22.6% from 19.63 billion in the same month last year. The total value of transactions rose 18% year on year to Rs. 29.37 trillion, compared with Rs. 24.89 trillion in September 2025.
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However, activity dipped slightly compared with August. UPI transaction volume fell 1.8% from 24.51 billion in August to 24.07 billion in September. Transaction value declined 1.5%, from Rs. 29.82 trillion to Rs. 29.37 trillion.
The month-on-month decline in transaction volume was partly due to September having 30 days, compared with 31 in August.
What Does the UPI MDR Delay Mean for Merchants and Customers?
For merchants, the postponement means more time before the proposed charges are introduced on eligible UPI transactions. Businesses can continue to plan around the existing payment arrangements until the new implementation date is announced.
For customers, the deferment does not change how UPI payments work. The proposal concerns fees charged to merchants for select transactions, not a general fee on every UPI payment made by consumers.
The key question now is when NPCI will introduce the revised MDR structure. Until the organisation announces a specific date, merchants will have to wait for further clarity on when the new charges will begin.
Indrani Priyadarshini is a journalist and editorial professional specialising in technology, artificial intelligence, smart cities, green energy, and digital transformation. With over four years of experience in tech journalism and digital media, she is known for turning complex industry developments into clear, engaging, and insightful stories. Her expertise spans reporting, editorial strategy, digital publishing workflows, and in-depth coverage of emerging technologies shaping the future.
