The National Payments Corporation of India (NPCI) has postponed the implementation of the Merchant Discount Rate (MDR) fee on select Unified Payments Interface (UPI) transactions until after the Diwali festival. The MDR was initially scheduled to start on October 15 but will now be introduced immediately following Diwali, which falls on November 8, meaning the fee will likely begin on November 9, according to livemint.com.
The decision to delay the MDR rollout was announced on October 13 by the UPI and Services Steering Committee, taking into account the festive season. NPCI managing director and CEO Dilip Asbe confirmed the deferral and stated that a new implementation date will be announced soon. The MDR fee applies to person-to-merchant (P2M) UPI transactions exceeding ₹2,000, with a 0.4% charge capped at ₹300 for transactions of ₹75,000 and above. Transactions below ₹2,000 and person-to-person payments remain exempt.
The MDR fee had been scrapped in January 2020 but was reintroduced by the government in September 2026 to cover costs borne by banks and payment gateways. The postponement follows concerns from trade bodies that the charges could reduce consumer spending during the crucial festive period. Small merchants with monthly UPI transactions up to ₹1 lakh are also exempt from the MDR charges, aiming to protect smaller businesses from additional costs.
With the MDR fee now set to begin shortly after Diwali, UPI transactions above ₹2,000 will continue to be free for about 20 more days. The exact date for the rollout will be communicated by NPCI in due course, as confirmed by Dilip Asbe in the latest statement to livemint.com.