The NPCI has announced on 13st October 2026 that the implementation of MDR charges will be postponed until after the Diwali festival season, with the rollout now anticipated in the second week of November.
The UPI Steering Committee meeting discussed distinct challenges and set the festival season as the implementation period for MDR, starting this week (Thursday). NPCI regulates UPI and runs the country’s dominant digital payments platform.
Understanding the festive season, the UPI and Services Steering Committee has decided that MDR on select Person-to-Merchant (P2M) UPI transactions would be implemented immediately after Diwali on a date to be declared separately.
NPCI is considering proposals to reschedule the execution of UPI MDR to January 2027.
This decision follows requests from merchant associations, fintech firms, and payment companies asking the NPCI to postpone the implementation date. They had expressed concerns regarding customer sentiment ahead of the festive season sales, as well as issues concerning varying MDR rates, policies, and their applicability to different types of UPI transactions.
In the previous month, the UPI steering committee set the UPI MDR at 0.4% or 40 basis points for transactions exceeding Rs 2,000.
MDR is the fee that merchants are required to pay for processing digital payments. A 0.4 per cent fee means that for every ₹2,000 spent via UPI, a charge of ₹8 will apply, or ₹40 for every ₹10,000 payment.
The government is in fear that MDR will surge the cost of doing business during festive sales, even as inflation is rising. There are also concerns that merchants might pass on the cost of MDR to customers in some form.
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The Finance Minister stated on October 8 that stakeholders would look into the matter of MDR on UPI transactions, and the decision regarding when to implement the charges has been left to the payment ecosystem.
