The National Payments Corporation of India (NPCI) has announced that it will implement a Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions after Diwali. “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 at a date to be notified separately,” NPCI said in a post on X.
Earlier, reports said a proposal to defer the rollout of the merchant discount rate on UPI from October 15 to January 1 was under consideration. The reports came after economic think tank GTRI said that the government should withdraw the proposed UPI charges and keep the digital payment system free for merchants and consumers.
What was the proposal?
Under the Payments Regulatory Framework, a Merchant Discount Rate (MDR) of 0.4 per cent was planned on select merchant UPI transactions valued above Rs 2,000, effective October 15, 2026. However, given the record digital purchases seen in markets during Dhanteras and Diwali, there were concerns that imposing merchant charges at this time could confuse merchants and the digital payments ecosystem.
