NPCI Defers UPI Merchant Discount Rate Until After Diwali

The National Payments Corporation of India on Tuesday deferred the introduction of a Merchant Discount Rate on certain Unified Payments Interface transactions until after Diwali. The UPI and Services Steering Committee took the decision to keep the festive shopping period free of the new charge. A revised implementation date will be notified separately.

Under the plan originally scheduled for 15 October, a 0.4 per cent MDR would have applied to selected person-to-merchant payments above ₹2,000. The rate was capped at ₹300 for transactions of ₹75,000 and above, with a flat ₹5 fee for some categories. Person-to-person transfers and consumer payments would have remained free. The charge was to be borne by merchants.

NPCI stated that the committee acted with the festive season in mind. The organisation has not yet listed the precise merchant categories that will be subject to the fee, nor has it published the full operational rules that will govern exemptions or settlement. Retailers had expressed concern that the charge would arrive during the peak Diwali period.

The deferral leaves the existing zero-MDR framework in place for the immediate weeks ahead. NPCI has previously indicated that some form of merchant fee is necessary to sustain the network as transaction volumes grow. No alternative funding mechanism was announced alongside the postponement. Banks and payment aggregators will continue current settlement practices until the new date is fixed.

Diwali falls in late October this year. The exact post-Diwali start date remains open. Merchants who had prepared systems for the 15 October change will need to wait for the fresh notification before adjusting pricing or contracts. NPCI has not indicated whether the 0.4 per cent rate or the ₹2,000 threshold will be revised when the fee is finally introduced.