The National Payments Corporation of India (NPCI) has postponed the implementation of Merchant Discount Rate (MDR) charges on select Unified Payments Interface (UPI) transactions until after Diwali. The decision aims to prevent confusion and disruption during the busy festive shopping season. In a release dated October 13, NPCI said the UPI and Services Steering Committee had approved the revised timeline. The committee will announce the exact implementation date separately. The charges were earlier scheduled to take effect from October 15. The postponement gives merchants, fintech companies and payment service providers additional time to prepare for the proposed changes. It also allows businesses to manage festive transactions without immediate changes to their payment costs.
Why NPCI Delayed the UPI MDR Rollout Until After Diwali
The decision follows requests from merchant associations, fintech firms and payment companies to reconsider the rollout timeline. Industry stakeholders raised concerns about confusion over the proposed charges and their impact on businesses and customers. Earlier reports suggested that NPCI was considering postponing implementation until January 2027. However, the latest announcement confirms that the charges will begin immediately after Diwali, on a date that NPCI will notify separately. The festive season typically brings higher spending on clothing, electronics, travel, groceries and other purchases. Retailers and online sellers depend heavily on digital payments during this period. The postponement gives the industry more time to communicate the proposed changes and prepare merchants for implementation.
The proposed framework includes a Merchant Discount Rate of 0.4% on select person-to-merchant UPI transactions above ₹2,000. MDR refers to the fee merchants pay for accepting certain digital payments. Under the proposed rate, a merchant would pay ₹40 on an eligible transaction worth ₹10,000. However, the charge will apply only to transactions covered by the final rules. NPCI has not provided complete details about all eligible transaction categories in its October 13 announcement. Merchants and payment providers will therefore need to wait for further clarification before determining how the changes will affect their operations. The applicable fee may depend on the transaction category and the final implementation guidelines.
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Charges Above ₹2,000: Proposed MDR Rates and Impact on Merchants
The proposed MDR framework has also raised questions about payment costs and the future of digital transactions. Merchants may need to review their payment arrangements once NPCI announces the final rules. Payment companies and fintech firms must also communicate the changes clearly to avoid misunderstandings among businesses and customers. Industry representatives have expressed concerns about identifying eligible transactions and understanding whether different merchant categories will face different rates. Clear guidelines could help businesses prepare their systems and explain any applicable charges to customers. The latest postponement provides additional preparation time, but it does not establish the final date or settle every question surrounding the proposed MDR framework.
NPCI has confirmed that the committee will introduce MDR on select person-to-merchant UPI transactions immediately after Diwali, with the exact date to follow in a separate notification. Until then, merchants and payment service providers must await official instructions about implementation and transaction eligibility. The decision highlights the importance of communicating payment-related changes clearly during periods of high consumer spending. Businesses should follow official NPCI announcements rather than rely on unconfirmed implementation dates. The revised timeline gives the industry more time to prepare, while the final notification will determine when the proposed charges take effect. Customers and merchants should check the applicable rules before assuming that every UPI payment above ₹2,000 will attract an MDR fee.