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The National Payments Corporation of India (NPCI) is considering postponing the proposed implementation of a 0.4% merchant discount rate (MDR) on eligible UPI merchant transactions
until January 2027, according to reports published on October 8 and 9.
The proposed charges were originally scheduled to take effect from October 15, 2026. Merchant associations, fintech companies and payment firms have reportedly requested a delay, citing concerns about implementation timelines, varying fee structures and the impact on businesses during the festive shopping season.
Under the proposed framework, a 0.4% MDR would apply to eligible person-to-merchant UPI transactions above ₹2,000. The fee is paid by merchants for processing digital payments and is not a direct transaction charge on consumers. Person-to-person transfers and eligible small-value merchant transactions would remain exempt.
The proposed postponement could give payment companies additional time to upgrade their systems and help merchants prepare for the new fee structure. However, the delay could also postpone a potential source of revenue for banks and digital payment providers.
As of the reports reviewed on October 9, a final official confirmation of the postponement had not been established. The implementation date and applicable exemptions remain subject to confirmation by the relevant authorities.
The proposed charges were originally scheduled to take effect from October 15, 2026. Merchant associations, fintech companies and payment firms have reportedly requested a delay, citing concerns about implementation timelines, varying fee structures and the impact on businesses during the festive shopping season.
Under the proposed framework, a 0.4% MDR would apply to eligible person-to-merchant UPI transactions above ₹2,000. The fee is paid by merchants for processing digital payments and is not a direct transaction charge on consumers. Person-to-person transfers and eligible small-value merchant transactions would remain exempt.
The proposed postponement could give payment companies additional time to upgrade their systems and help merchants prepare for the new fee structure. However, the delay could also postpone a potential source of revenue for banks and digital payment providers.
As of the reports reviewed on October 9, a final official confirmation of the postponement had not been established. The implementation date and applicable exemptions remain subject to confirmation by the relevant authorities.
