The implementation of Merchant Discount Rate (MDR) on select Unified Payments Interface (UPI) transactions has been deferred until after Diwali, the National Payments Corporation of India (NPCI) said on Tuesday, confirming earlier reports that the rollout could be postponed to avoid disruption during the festive season.
The and Services Steering Committee decided that MDR on select person-to-merchant (P2M) transactions would be implemented immediately after Diwali. The exact date will be announced separately, according to an NPCI release dated October 13.
“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,” said NPCI in its release.
The decision comes after reports that NPCI was considering requests from merchant bodies, fintech firms and payment companies to delay the proposed charges, which were earlier scheduled to take effect from October 15.
A Moneycontrol report earlier said of the implementation until January 2027 amid concerns over the impact on merchants and consumers during the festive shopping season.
The industry had raised concerns over confusion around the proposed charges, including which transactions would attract MDR and whether different rates would apply across categories.
The proposed framework includes a 0.4% MDR on select UPI transactions above Rs 2,000. Under this rate, a transaction of Rs 10,000 would attract a charge of Rs 40.
MDR is a fee paid by merchants for accepting digital payments. Depending on the applicable arrangement, it can affect the cost of accepting payments for businesses.
The festive season is a crucial period for retailers and online sellers, with transaction volumes typically rising as consumers spend on shopping, electronics, travel and other purchases. The postponement gives the industry more time before the charges take effect, although the revised implementation date is yet to be announced.
NPCI has not specified the date on which the charges will be introduced or provided further details on the transactions covered by the decision in its October 13 release.
The committee has said only that the MDR on select P2M UPI transactions will be implemented immediately after Diwali. Further clarity on the timeline is expected when the date is formally notified.