NPCI Says MDR on UPI Merchant Payments Will Roll Out After Diwali

The National Payments Corporation of India (NPCI) announced on Tuesday (October 13, 2026) that the proposed Merchant Discount Rate (MDR) on person-to-merchant UPI payments will take effect only after Diwali. The UPI and Services Steering Committee decided to hold off implementation in view of the festive season, according to the NPCI. A specific start date will be notified separately.

The decision defers a charge that the government cleared last month. Under the framework approved then, UPI transactions above ₹2,000 will attract a fee of 0.4%. The NPCI said the levy will apply to select Person-to-Merchant (P2M) transactions rather than all UPI payments.

The delay follows comments from Reserve Bank of India Governor Sanjay Malhotra, who said on Wednesday (October 7, 2026) that a small merchant discount rate would not significantly affect UPI transaction volumes. Speaking to reporters at the central bank's Mumbai headquarters, he said no drop in volumes had been observed so far and that he did not personally expect a small fee to have a major impact.

Merchants have pushed back on who should absorb the cost. In related coverage, The Hindu reported that merchant groups have argued that banks and the government, rather than businesses, should bear UPI charges.

With the rollout now pushed past the festive shopping period, attention turns to when the NPCI will notify the implementation date. Until then, the MDR on the designated P2M transactions remains on hold.