NPCI defers MDR on select UPI merchant payments until after Diwali

The National Payments Corporation of India (NPCI) clarified on Tuesday, October 13, 2026, that the merchant discount rate (MDR) on select UPI merchant payments will be implemented only after the coming Diwali.

In an official statement issued from Mumbai on October 13, 2026, NPCI said the decision was taken in view of the festival season and rising purchases by customers. The date from which the new arrangement will begin has not yet been announced. A separate notification of the date will be issued soon.

It had earlier been expected that the rule could come into force from October 15. Now, given the importance of the festivals and customer convenience, preparations have been indicated to implement it after Diwali. NPCI's official statement has so far not confirmed the exact rate and limit of the charge.

The decision was taken at a meeting of NPCI's UPI and Services Steering Committee on October 13. The meeting decided to levy MDR on select person-to-merchant (P2M) UPI transactions. This means the new arrangement will apply to transactions in which a customer pays a business or shopkeeper through UPI.

According to the proposal, a 0.4 per cent MDR was to be levied on select merchant UPI transactions of more than Rs 2,000. Implementation from October 15 had been under discussion earlier, but it will now come into effect only after Diwali.

MDR is the fee charged to a shopkeeper or trader for completing a digital payment. Once the proposal is implemented, select merchant transactions may be affected. Whether the burden falls directly on ordinary customers will depend entirely on the final rules and the fee guidelines.

For now, it is clear only that the decision applies solely to select merchant UPI transactions. Citizens and traders will have to wait a little longer for firm answers on which transactions will attract the charge, what the rate will be and from which date the arrangement will actually begin.