The implementation of Merchant Discount Rate (MDR) charges on select Unified Payments Interface (UPI) merchant transactions has been postponed until after Diwali, the National Payments Corporation of India (NPCI) announced on October 13.
The UPI and Services Steering Committee decided that the charges would apply to select person-to-merchant (P2M) transactions immediately after Diwali. However, NPCI said the exact implementation date would be notified separately.
The decision delays the proposed rollout, which was earlier expected to take effect from October 15. The postponement comes amid concerns raised by merchant bodies, fintech companies and payment service providers about the timing and potential impact of the charges during the festive shopping season.
Why Has the UPI MDR Rollout Been Delayed?
According to earlier reports, NPCI had been considering requests to postpone the implementation amid concerns about its impact on merchants and consumers.
Industry stakeholders also raised questions about the proposed framework, including which transactions would attract MDR and whether different merchant categories would face different rates.
The proposed structure includes a 0.4% MDR on select UPI transactions above ₹2,000. Under this rate, a merchant accepting a payment of ₹10,000 would face a charge of ₹40.
MDR is a fee paid by merchants for accepting digital payments. The actual charge depends on the applicable transaction rules and payment arrangements.
What Does the Decision Mean for Merchants and Consumers?
The postponement gives businesses additional time before the proposed charges take effect. The festive season is an important period for retailers and online sellers, as consumers spend on clothing, electronics, travel, gifts and other purchases.
However, the announcement does not provide a final implementation date or additional details about the transactions covered by the decision. Merchants will need to wait for NPCI’s formal notification to understand the precise scope and timing of the charges.
The proposed MDR also raises questions about whether businesses may absorb the payment-processing cost or pass some of it on to customers. The announcement does not specify how merchants will handle these costs.
For consumers, the key distinction is that the announced MDR concerns select merchant transactions, rather than establishing a universal fee on every UPI payment.
When Will the New UPI Charges Start?
NPCI has said that MDR on select P2M UPI transactions will be implemented immediately after Diwali, but the exact date remains unannounced.
Until further details are issued, merchants and payment providers will need to monitor official notifications for clarity on the applicable rates, transaction categories and implementation timeline.
For official updates, visit the NPCI website.
Conversation
Be kind and stay on topic. Comments are moderated; abuse, spam and personal attacks are removed. Report a problem