UPI MDR Charges Deferred Until After Diwali By NPCI; Mumbai Traders Welcome Relief From 0.4% Fee

Mumbai: The National Payments Corporation of India (NPCI) on Tuesday deferred the proposed Merchant Discount Rate (MDR) on select person-to-merchant (P2M) UPI transactions until after Diwali. The revised implementation date will be notified separately.

Festive Season Prompts Postponement

In a statement, the NPCI said: “The UPI and Services Steering Committee on Tuesday (October 13, 2026) decided that, keeping in mind the festive season, the Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions shall be implemented post-Diwali immediately on a date to be notified separately.”

The proposed levy provides for an MDR of 0.4% on eligible merchant transactions above Rs 2,000. The fee, scheduled to take effect on October 15, has drawn opposition from retail traders concerned about the additional cost during the festive season. Person-to-person transactions and eligible small merchants will remain exempt.

Mumbai Traders Welcome Decision

Mumbai traders welcomed the postponement. “UPI MDR is now delayed. Congratulations to all traders’ organisations,” said Viren Shah, president of the Federation of Retail Traders Welfare Association (FRTWA).

The association had written to Finance Minister Nirmala Sitharaman, arguing that the fee would add to traders’ costs amid a prolonged slowdown, weak sales and pressure on margins and cash flows.

Earlier, Reserve Bank of India Governor Sanjay Malhotra had said that levying a “small fee” as MDR would not have a “major impact” on UPI transaction volumes.

UPI was launched by the NPCI in April 2016, with services becoming available through participating banks and apps that year. The platform enables instant bank-to-bank payments through mobile phones.

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