MDR Implementation on UPI Transactions Above Rs 2,000 Postponed Until After Diwali
MUMBAI: The National Payments Corporation of India (NPCI) has officially deferred the implementation of the merchant discount rate (MDR) on select person-to-merchant UPI transactions until after the Diwali festival season. This decision aims to prevent additional costs for businesses during a critical period for retail activity. The new implementation date will be announced separately.
The finance ministry and NPCI had previously considered pushing the MDR rollout to January 2027 from the originally planned date of October 15. However, the latest announcement confirms that the MDR will now take effect immediately after Diwali. The MDR framework, approved on September 15, includes a 0.4% charge for eligible P2M UPI transactions exceeding Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above.
Trade bodies and merchant associations had advocated for a delay in the fee’s introduction, arguing that it could hinder sales during the festive season when digital payments typically surge. The framework was intended to establish a revenue stream for the payments ecosystem after over six years of zero MDR on UPI. Payments up to Rs 2,000 and transactions from eligible small merchants will remain free, with approximately 96% of P2M transactions expected to be unaffected by the new charges.
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