The introduction of a merchant discount rate (MDR) on select UPI transactions may be deferred from October 15 to January 1, 2027, amid pushback from retail traders’ associations.
A proposal to postpone the rollout is under consideration, with a final decision expected in the coming days, Business Standard reported. A deferment would keep eligible merchant payments free of MDR through the festive season.
Members of the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), met yesterday to discuss the rollout and clarify aspects of the framework, the report said.
The committee is also considering exempting businesses with annual turnover of up to ₹40 Lakh, the report added. This would significantly expand the proposed exemption from the earlier framework, under which small merchants receiving up to ₹1 Lakh a month through UPI QR codes directly into their bank accounts were to be spared the fee.
Inc42 has reached out to NPCI for comment on the development. The story will be updated based on its response.
MDR is a fee merchants pay for processing digital payments. Under the announced framework, a 0.40% charge would apply to eligible person-to-merchant (P2M) UPI transactions above ₹2,000, capped at ₹300 per transaction.
Specified categories, including bill payments, utilities, education, and fuel, would attract a flat fee of ₹5 per transaction above ₹2,000. Consumers will not have to pay MDR.
The ₹2,000 transaction threshold is expected to remain unchanged, according to the report. Separately, authorities are considering raising the daily UPI transaction limit for certain categories from ₹1 Lakh to ₹2 Lakh.
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