The National Payments Corporation of India (NPCI) has deferred the introduction of merchant discount rate (MDR) on select UPI person-to-merchant (P2M) transactions until immediately after Diwali, pushing back the October 15 rollout.

The NPCI said its UPI and Services Steering Committee took the decision keeping the festive season in mind. The revised implementation date will be notified separately.

The announcement confirms a delay in the rollout but does not set January 1, 2027, as the new deadline, as earlier reports had suggested.

Under the proposed framework UPI MDR, merchants would be charged an MDR of 0.40% on eligible P2M UPI transactions above ₹2,000, capped at ₹300 per transaction. 

The move had faced significant push back from retail traders’ associations. The committee was also reportedly considering exempting businesses with an annual turnover of up to ₹40 Lakh from the proposed fee.

The new framework marks a shift from the zero-MDR regime. Transactions up to ₹2,000, person-to-person (P2P) transfers and eligible small-merchant transactions would remain exempt.

The All India Mobile Retailers Association (AIMRA) and the All India Consumer Products Distributors Federation (AICPDF) had called for a ‘No UPI Day’ on October 2 to protest the proposed charges. They withdrew the planned protest after meeting Finance Minister Nirmala Sitharaman on September 30.

AIMRA had sought a fixed, nominal charge for digital transactions instead of the proposed 0.40% MDR. The AICPDF, meanwhile, has estimated that the fee could add ₹7,000 Cr-₹9,000 Cr in annual costs across the FMCG distribution and retail ecosystem.

Recently, the Supreme Court refused to stay the Centre’s implementation of MDR charges on select UPI transactions.

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