New Delhi: The implementation of the Merchant Discount Rate (MDR) on select person-to-merchant (P2M) UPI transactions has been pushed back to after Diwali.
This was decided by the UPI and Services Steering Committee on Tuesday, according to a statement by the National Payments Corporation of India (NCPI) on X.
NPCI’s decision takes into account the festive season, with the implementation date to be notified separately, the statement said.
MDR is a fee charged from merchants for processing digital payments beyond a certain limit. The proposed move will apply only to select merchant transactions.
Merchants accepting UPI payments above Rs 2,000 would have to pay a fee of 0.4% of the transaction value, as per the new framework. However, person-to-person transfers will be exempted from the charge, and payments to certain categories will attract a flat Rs 5 fee irrespective of the amount, as reported by Hindustan Times.
The MDR framework came after the Parliament cleared the Taxation and Other Laws (Amendment) Bill, 2026 on August 11, amending Section 10A of the Payment and Settlement Systems Act, 2007, to give the government the power to permit charges on specified digital payment modes.
Two types of fees will apply to UPI payments above Rs 2,000 based on this. The first is a flat MDR of Rs 5 per transaction on payments to merchants in four specified categories — railways, telecom services, insurance and fuel.
The second constitutes an MDR of 0.4% on other person-to-merchant (P2M) UPI payments above Rs 2,000, capped at Rs 300 per transaction.
