MDR on UPI transactions over Rs 2,000 deferred; to come into effect post Diwali
MUMBAI: Its official. There will be no MDR on UPI until the festival season is over. The National Payment’s Corporation of India’s The UPI and Services Steering Committee has deferred the implementation of merchant discount rates (MDR) on select person-to-merchant UPI transactions until immediately after Diwali, citing the festive season. The implementation date will be notified separately.The Times of India had reported last week that finance ministry and the National Payments Corporation of India (NPCI) have decided to defer the introduction of merchant discount rate (MDR) on select UPI transactions, seeking to avoid adding to business costs and hitting consumption at a time of economic headwinds, people aware of the matter said. The revised rollout was expected to be pushed to January 2027 from October 15. However,the announcement on Tuesday states that the implementation will be immediately after Diwali.The MDR framework was approved and notified by NPCI on September 15, with a 0.4% charge for eligible person-to-merchant (P2M) UPI transactions above Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above. The framework was to take effect from October 15, giving banks, payment aggregators and other ecosystem participants a month to make operational changes.Also read: Pakistan angle under probe? Delhi Police files 4 FIRs over fake posts since Oct 10The decision to defer the rollout comes just days before the scheduled start and follows demands from trade bodies and merchant associations for a January implementation. They have argued that introducing the fee during the festive season, when retail activity and digital payments typically rise, could increase costs for merchants and weigh on sales.The framework was designed to create a revenue stream for the payments ecosystem after more than six years of effectively zero MDR on UPI. The government had said the levy would apply only to specified merchant transactions, with payments up to Rs 2,000 and eligible small merchants continuing to remain free. About 96% of P2M transactions were expected to remain unaffected.The deferment gives merchants and payment companies more time to prepare while allowing the government to avoid introducing a new transaction cost at a potentially sensitive point for consumption.
