UPI MDR Rollout Deferred: 0.4% Fee On Transactions Above Rs 2,000 To Start After Diwali

The government has postponed the 0.4% MDR on UPI merchant transactions above Rs 2,000 until after Diwali, moving beyond October 15 amid preparations for the busy festive shopping season.

Post Published By: Pradeep Tripathi

Updated : 13 October 2026, 2:30 PM IST

UPI merchant transaction fee deferred until after Diwali (Img: X)

New Delhi: The Centre has deferred the planned rollout of a 0.4% Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions above Rs 2,000. The National Payments Corporation of India (NPCI) said the charge would be introduced after Diwali.

Under the original plan, merchants would have paid MDR on person-to-merchant (P2M) transactions exceeding Rs 2,000, while person-to-person (P2P) transfers would have remained free.

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: NPCI

@NPCI_NPCI @UPI_NPCI #MerchantDiscountRate

— Dynamite News (@DynamiteNews_) October 13, 2026

Festive Season Influenced Timing

The possibility of a delay expected as reports suggesting that the government was considering postponing the rollout by a few months, potentially until January 2027. Those reports cited a regulatory official and an industry executive familiar with the matter.

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The October 15 deadline coincided with the busy festive shopping season, which typically runs from October to December and brings a sharp rise in consumer spending. Postponing the fee is expected to help avoid disruption to retail payments during this period while giving payment companies additional time to prepare their systems.

MDR Seen As Potential Revenue Source

The proposed charge had also attracted attention from investors, as it was expected to create a revenue stream for payment companies. These firms were likely to receive a share of the proceeds generated through the fee.

MDR is a charge paid by merchants for accepting digital payments. It is generally calculated as a percentage of the transaction amount and deducted by the bank before the remaining funds are credited to the merchant.

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NPCI Operates India’s Retail Payment Systems

NPCI is the umbrella organisation responsible for operating retail payment and settlement systems in India. It was established by the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA).