Digital Payment / NPCI Defers MDR on UPI Transactions till after Diwali

New Delhi, Oct 13: As India’s festive season gathers momentum, the digital payments ecosystem has been handed a breather. The National Payments Corporation of India (NPCI) has chosen to delay the rollout of the Merchant Discount Rate (MDR) on select Unified Payments Interface (UPI) transactions, ensuring that both merchants and consumers can enjoy a seamless shopping experience through Diwali.

The decision, taken by NPCI’s UPI and Services Steering Committee, reflects a strategic pause — one that balances regulatory reform with the spirit of celebration, offering temporary relief to businesses while maintaining confidence in India’s fast‑growing digital payment network.

In a statement, NPCI said its UPI and Services Steering Committee decided to postpone the implementation, originally scheduled for October 15, keeping the festive period in mind.

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“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,” NPCI stated.

The revised date will be announced later.

The decision sparked a rebound in fintech stocks, which recovered from intra‑day lows following the announcement.

Under the proposed MDR framework, select merchant categories such as railways, telecom, insurance, and fuel will attract a flat ₹5 charge on UPI transactions exceeding ₹2,000.

Payments to large merchants above the same threshold will incur 0.4% MDR, capped at ₹300 per transaction.

NPCI clarified that the new structure will have a limited impact on the UPI ecosystem. Only about 4% of merchant transactions are expected to fall under the new charges, while over 95% of P2M transactions will remain free of MDR.

The framework also retains the zero‑MDR regime for small merchants operating under the person‑to‑person merchant (P2PM) model, ensuring they are not burdened with additional costs.

The deferment comes amid intense industry debate over the reintroduction of MDR and its potential impact on merchants, fintech firms, and India’s digital payments landscape.

(IANS)