UPI MDR Charges From October 15 May Face A Surprise Twist, Will Government Delay New Payment Rules Until January 2027?

Mumbai: The government's plan to introduce Merchant Discount Rate (MDR) charges on Unified Payments Interface (UPI) transactions above Rs 2,000 could face a delay, with implementation potentially shifting from October 15, 2026, to January 2027.

According to a Reuters report citing regulatory and industry sources, the government is considering postponing the rollout to avoid disruptions during the festive shopping season and allow payment companies additional preparation time.

However, no official announcement confirming the postponement has been made.

Why Could MDR Be Delayed?

The proposed 0.4 percent MDR was scheduled to become effective on October 15, coinciding with India's festive shopping season.

Retail transactions typically increase significantly between October and December, making payment stability particularly important.

A postponement would allow banks, payment service providers and merchants additional time to upgrade their systems and implement the revised charging framework.

UPI currently serves more than 500 million users across India.

What Are The Proposed Charges?

Under the announced framework, merchants accepting UPI payments above Rs 2,000 would face an MDR of 0.4 percent.

For transactions worth Rs 75,000 or more, the charge would be capped at Rs 300.

However, person-to-person UPI transfers would remain completely free.

Merchant transactions of Rs 2,000 or less would also attract no charges.

These smaller payments account for more than 95 percent of UPI merchant transaction volumes.

Paytm And Mobikwik Shares Fall

Reports of a possible postponement triggered selling in listed digital payment companies on Thursday.

Paytm shares declined 7.6 percent, while One Mobikwik Systems dropped 7.2 percent.

Investors had expected MDR implementation to create additional revenue opportunities for payment companies through transaction fee sharing.

A delay could postpone those anticipated earnings.

What Has RBI Said?

Reserve Bank of India Governor Sanjay Malhotra said Wednesday that a small MDR charge was unlikely to significantly affect UPI transaction volumes.

He indicated that the central bank did not anticipate a major decline in usage.

Will Consumers Pay Anything?

The government has clarified that UPI will remain free for consumers making person-to-person payments.

The proposed MDR applies to eligible merchant transactions, not ordinary individual transfers.

The final implementation timeline now depends on an official government decision.