Implementation of UPI charges scheduled for October 15 deferred; NPCI provides update on MDR
The MDR charge on UPI payments, originally set to take effect on October 15, has been postponed for now. According to the NPCI, the new system for merchant UPI transactions will be implemented after Diwali. Find out which payments will attract charges and what relief small shopkeepers will receive.
The NPCI (National Payments Corporation of India) has deferred the implementation of the MDR (Merchant Discount Rate) charge on UPI transactions, which was due to start on October 15. There had been a proposal to levy a 0.4% charge on merchant payments exceeding ₹2,000. However, the NPCI has now pushed back the date in response to requests from traders and in consideration of the festive season.
UPI and Services Steering Committee today decided that, keeping in mind the festive season, Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions, shall be implemented immediately post Diwali at a date to be notified separately https://t.co/yXWGuj6Z9M
— ANI (@ANI) October 13, 2026
The NPCI stated that the UPI and Services Steering Committee decided on October 13 to implement the MDR on Person-to-Merchant (P2M) UPI transactions immediately after Diwali. However, the new implementation date will be announced later.
What is MDR?
MDR stands for Merchant Discount Rate. Simply put, it is the processing fee charged to shopkeepers or merchants for accepting digital payments. It represents a small percentage of the transaction amount. This fee is paid by the merchant, not the customer. The amount is shared among banks, payment gateways, and card networks.
No MDR on merchant payments up to ₹2,000
There is no immediate cause for concern regarding small purchases, as MDR will not apply to merchant payments of up to ₹2,000. However, for larger payments—such as those for mobile phones, electronics, clothing, hotels, hospitals, or other high-value items—users might face a dilemma: whether to use UPI or opt for cards or cash. This rule is likely to have a more noticeable impact on larger transactions. UPI has become an integral part of daily life.
Small shopkeepers to get relief from MDR
According to the NPCI, the zero-MDR (Merchant Discount Rate) arrangement will continue for small shopkeepers who accept UPI payments of up to ₹1 lakh per month via existing QR codes. Meanwhile, person-to-person UPI transfers will remain completely free, regardless of the transfer amount. According to the Ministry of Finance, the new system will not affect approximately 96% of merchant UPI transactions.
