Good News for Merchants This Diwali: NPCI Defers UPI MDR Implementation on Select Transactions
The National Payments Corporation of India (NPCI) has deferred the implementation of the Merchant Discount Rate (MDR) on select Person-to-Merchant UPI transactions until after Diwali. The proposed framework, featuring a 0.4 per cent fee on transactions over INR 2,000, was delayed to support businesses and shoppers during the peak festive season.
The National Payments Corporation of India (NPCI) announced on Tuesday, October 13, that the implementation of the Merchant Discount Rate (MDR) on select commercial Unified Payments Interface (UPI) transactions will be deferred until after the festive season. The decision provides immediate relief to retailers, businesses, and consumers preparing for peak Diwali shopping, pushing back the previously scheduled rollout date to ensure uninterrupted digital payment operations during the high-volume trading period.
Steering Committee Decision and Announcement
The deferral was formally approved during a meeting of the UPI and Services Steering Committee. In an official media statement issued today, NPCI confirmed that the revised timeline was established in response to industry feedback and the expected surge in festive retail activity. No UPI MDR From October 15? Government May Defer New Charges Amid Festive Season.
NPCI Defers UPI Merchant Charges on Select Transactions Until After Diwali
UPI MDR on Select Merchant Transactions Shall be Implemented Post Diwali
Press Release Link: https://t.co/5KMjOP0tHd https://t.co/pD8IKfN6sR
— NPCI (@NPCI_NPCI) October 13, 2026
According to the official statement from NPCI: "UPI and Services Steering Committee today decided that, keeping in mind the festive season, Merchant Discount Rate (MDR) on select Person-toMerchant (P2M) UPI transactions, shall be implemented immediately post Diwali at a date to be notified separately".
Scope of Proposed MDR Framework
The Merchant Discount Rate framework, originally announced in September 2026, establishes a fee structure charged to merchants for processing digital transactions to support underlying payment infrastructure. Key details of the pending rollout include:
- Transaction Threshold: The proposed 0.4 per cent MDR will apply specifically to eligible Person-to-Merchant (P2M) transactions exceeding INR 2,000, with a maximum fee cap of INR 300 per transaction.
- Consumer Protection: Person-to-Person (P2P) transfers and payments to small merchants under the P2PM framework remain entirely free of charge.
- No Direct Consumer Surcharges: Regulators have clarified that the fee structure is merchant-side, and no platform fees or transaction surcharges will be levied on individual shoppers using UPI services. UPI MDR From October 15: RBI Governor Sanjay Malhotra Says 0.4% Fee Unlikely to Hit Transaction Volumes.
Implementation Outlook
Following the announcement, NPCI will issue a separate notification after the Diwali holiday specifying the exact date in November when the revised MDR charges will become operational across banking and payment service provider networks.
(The above story first appeared on LatestLY on Oct 13, 2026 02:17 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
