The National Payments Corporation of India (NPCI) had originally set October 15, 2025 as the date when a 0.4 percent merchant discount rate (MDR) would apply to Unified Payments Interface (UPI) business transactions exceeding Rs 2,000. The fee was to be paid by merchants, not consumers, and carried a maximum charge of Rs 300 for any transaction of Rs 75,000 or more. Under the plan, the collected amount would be split with 40 percent going to the customer’s bank, 30 percent to payment gateways, 20 percent to UPI apps, and 10 percent to the bank that sponsors the UPI app for third‑party transactions. The government was not slated to receive any direct revenue from the MDR.
NPCI said the decision to withdraw the fee temporarily was taken after reviewing the current financial climate and keeping the approaching festive season in mind. The authority wanted to make sure that the additional burden would not fall on large, medium and small merchants during a period when retail activity traditionally spikes. Inter‑person‑to‑person and small business UPI transfers remained free under the original design, and that status was unchanged.
The NPCI has deferred its planned 0.4% Merchant Discount Rate (MDR) on select UPI payments above ₹2,000. What is the fee, who pays it, and why has the implementation been postponed? Find out: https://t.co/LlIYc1jNlH @AnnaPriyadarsh3 @AjinkyaJK
Around September 30, 2026, approximately twenty trade leaders from the All India Trade Federation met Finance Minister Nirmala Sitharaman to express their opposition to the impending charge. Consumer groups had also raised objections, arguing that the fee could discourage digital payments during the holiday shopping window. The meeting and the broader pushback played a role in NPCI’s reconsideration.
For transactions of Rs 75,000 or higher, the charge is capped at Rs 300.
Following the feedback, NPCI announced that the implementation date for the MDR would not be announced until after the festival season. The exact new date remains to be declared, but the corporation indicated it expects to share the schedule shortly after Diwali. This aligns with a separate request from various industry associations that had asked for a postponement from October 15 to January in order to protect holiday retail sales.
NPCI defers UPI MDR rollout beyond October 15, pushing the introduction of charges on select merchant transactions until after Diwali amid the festive season @radhika1705 https://t.co/ey6wqA8H2r
Even though the start date is delayed, the structure of the MDR remains as previously outlined. The rate is set at 0.40 percent of the transaction value. For transactions of Rs 75,000 or higher, the charge is capped at Rs 300. Certain essential sectors—railways, telecom and insurance—would have faced a lower cap of Rs 5 per transaction, while stock market and mutual fund transfers were slated to incur a fixed 0.02 percent fee. The revenue‑sharing formula (40/30/20/10) and the stipulation that the government would not directly benefit remain part of the plan.
On a Tuesday that NPCI identified in its announcement, the UPI and Services Steering Committee confirmed that the planned implementation of the 0.4 percent MDR on person‑to‑merchant UPI transactions above Rs 2,000 has been deferred. The committee reiterated that the MDR is a merchant‑borne fee, not a consumer charge, and emphasized the Rs 300 ceiling for transactions of Rs 75,000 or more. The deferment was explicitly made to accommodate the festive season.
The UPI and Services Steering Committee on Tuesday decided to implement the Merchant Discount Rate (MDR) on select person-to-merchant (P2M) UPI transactions immediately after Diwali, according to a statement by NPCI on X. https://t.co/Lc3Gq0FLgX
NPCI quoted the UPI and Services Steering Committee directly: "UPI and Services Steering Committee today decided that, keeping in mind the festive season, Merchant Discount Rate (MDR) on select Person‑to‑Merchant (P2M) UPI transactions shall be implemented immediately post Diwali on a date to be notified separately." This statement captures the rationale behind the delay and sets the expectation that the fee will return once the holiday period concludes.
As of now, the MDR on UPI transactions over Rs 2,000 remains on hold. Merchants continue to enjoy fee‑free acceptance for qualifying payments while the nation moves through its festive cycle. NPCI has said it will announce the new implementation date after Diwali, leaving the exact timing open but tying it to the close of the holiday season.