UPI MDR Charges: When Will New Merchant Transaction Fees Take Effect

The festive season is coming to an end, but there is still no confirmed date for the introduction of the merchant discount rate (MDR) charges on select Unified Payments Interface (UPI) transactions. 

The National Payments Corporation of India (NPCI) had initially planned to introduce the revised charges from October 15, 2026. However, the rollout was postponed, with the organisation indicating that the new rules would take effect after Diwali.

In a statement issued on October 13, 2026, NPCI announced that the revised date would be communicated separately. With Bhai Dooj falling on November 11, merchants are awaiting an official announcement on the implementation.

Reason Behind The MDR Rollout Delay

The decision to postpone the new charges was linked to the festive shopping period. NPCI's UPI along with the Services Steering Committee decided against introducing additional transaction costs during a period of high retail activity.

Under the revised schedule, MDR on selected person-to-merchant (P2M) UPI payments will come into force after Diwali. However, NPCI has not yet provided a specific date for the rollout.

Revised MDR Rates For UPI Merchant Payments

According to NPCI’s FAQs published on September 15, an MDR of 0.40 per cent will apply to eligible merchant payments above Rs 2,000.

The charge will have an upper limit of Rs 300 for transactions worth Rs 75,000 or more. For instance, a merchant receiving Rs 1 lakh through an eligible UPI transaction would face a charge of Rs 400 at the prescribed rate. However, the maximum amount payable as MDR would be Rs 300.

Some merchant categories will have different rates. Payments above Rs 2,000 for railway bookings, telecom services, insurance and fuel will attract a flat MDR of Rs 5 per transaction.

A lower rate of 0.02 per cent will apply to capital market payments, including mutual fund investments, securities and transactions involving stockbrokers and dealers. The maximum charge in this category will also be Rs 300.

The MDR is a fee charged to the merchant accepting the payment. It is not a separate charge on the customer making the UPI payment.

No MDR On Person-To-Person UPI Transfers

The proposed charges cover selected person-to-merchant transactions and do not apply to person-to-person (P2P) payments. Individuals making UPI transfers to friends or family members, splitting bills or moving money between their own bank accounts will not have to pay MDR.

NPCI Yet To Confirm Implementation Date

NPCI is yet to announce the final implementation date. Its earlier communication indicated that the charges would start immediately after Diwali, but the exact date is still pending. The revised rates could take effect in November, subject to a formal notification from NPCI.