India digital payment system is heading towards a significant pricing change after the National Payments Corporation of India (NPCI) postponed the proposed merchant discount rate (MDR) on select UPI transactions until after Diwali 2026.
The charges were originally scheduled to take effect on October 15. On October 13, NPCI announced that implementation would be delayed to avoid disruption during the busy festive shopping season. The revised date will be announced separately.
Under the announced framework, an MDR of 0.4% would apply to eligible person to merchant (P2M) UPI transactions above ₹2,000, subject to a maximum fee of ₹300 per transaction. Specific categories may have different fee structures. MDR is a processing fee paid by merchants to entities involved in handling digital payments. It is not the same as a direct transaction fee charged to customers
The government has stated that customers will not face direct UPI transaction charges. Person to person transfers are also expected to remain free, while most everyday merchant transactions remain outside the proposed levy. However, merchants and payment providers will need to prepare for the revised framework. Businesses should wait for official implementation instructions before changing their payment policies.
The postponement offers retailers additional preparation time before and after the festive rush. Customers and merchants should follow official NPCI and Ministry of Finance announcements for the confirmed launch date and applicable categories.
