New Delhi: The decision to implement a 0.4% Merchant Discount Rate (MDR) on select UPI payments above ₹2,000 has been postponed. The National Payments Corporation of India (NPCI) has decided to implement this fee immediately after Diwali, keeping the festive season in mind. The new date will be announced separately. This rule was originally scheduled to come into effect on October 15th, 2026.
Decision taken in view of the festive season
NPCI’s UPI and Services Steering Committee took this decision on October 13th. The fee implementation date has been postponed due to increased shopping and digital payments during the festive season. This decision will give merchants and payment companies additional time to prepare for the new system.
Which payments will be subject to 0.4% MDR?
Under the proposed system, 0.4% MDR will apply to select merchant payments (P2M) above ₹2,000. This fee is paid by merchants and merchants to payment processing entities.
Person-to-Person (P2P) UPI transfers between individuals and merchants and merchant payments up to ₹2,000 are not covered by this proposed fee. The maximum fee for eligible transactions of ₹75,000 or more has been set at ₹300.
Customers will not have to pay MDR directly
MDR is a fee associated with the merchant payment system, which merchants pay. This does not mean that every UPI customer will have to pay an additional 0.4% fee directly for payments above ₹2,000. However, the impact of the new cost to merchants on customers after the implementation of the new system will depend on the future situation.
NPCI has stated that the new date for implementing the fee will be announced separately. For now, it has been postponed until after Diwali.