The National Payments Corporation of India (NPCI) on Tuesday deferred the implementation of merchant discount rate (MDR) charges on select Unified Payments Interface (UPI) transactions above Rs 2,000 until after Diwali, following requests from traders to postpone the rollout during the festive season.
The charges were earlier scheduled to take effect on October 15. The NPCI said the revised date would be announced separately.
“The UPI and Services Steering Committee today decided that, keeping in mind the festive season, Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions shall be implemented immediately post Diwali at a date to be notified separately,” the NPCI said in a statement.
What Are the Proposed UPI Charges?
Under the proposed framework, an MDR of 0.4 per cent will apply to eligible person-to-merchant UPI transactions exceeding Rs 2,000. The charge is intended to help cover the costs of operating and maintaining digital payment infrastructure.
For eligible transactions in certain sectors, including railways, telecommunications, insurance, fuel and agricultural inputs, a flat charge of Rs 5 will apply to payments above Rs 2,000.
The charges will apply to merchants receiving payments, not customers making UPI payments. Person-to-person transactions will remain free, while merchant payments of up to Rs 2,000 and transactions covered under the zero-MDR framework for small merchants will remain exempt.
According to the Union Finance Ministry, around 96 per cent of merchant transactions will remain unaffected by the proposed changes.
Traders Raise Concerns Ahead of Festive Season
The proposed charges have raised concerns among traders and businesses about the cost of accepting digital payments, particularly during the festive shopping season, when transaction volumes typically increase.
Deferring the rollout is expected to give merchants and payment service providers more time to prepare for the changes.
The NPCI is yet to announce the revised implementation date. Until then, the proposed MDR framework remains pending for the eligible transactions covered by the decision.
