Summary of this article
NPCI committee to decide on postponing UPI MDR implementation to January 2027.
Proposed 0.4 per cent fee applies to eligible UPI transactions above Rs 2,000.
Merchants and fintechs seek delay over festive sales and implementation concerns.
The National Payments Corporation of India (NPCI) has scheduled a meeting of its Unified Payments Interface (UPI) Steering Committee for October 9, 2026 to decide whether to defer the implementation of merchant discount rates (MDR) on certain UPI transactions.
The meeting is expected to take place in the first half of the day, with an announcement on the decision likely between 1 pm and 2 pm.
UPI Merchant Fee Rollout Faces Pushback
NPCI is considering requests to postpone the implementation of UPI MDR until January 2027. The proposed charges are scheduled to take effect from October 15, 2026.
Merchant associations, fintech firms and payment companies have sought more time, raising concerns about the impact on festival-season spending, differences in fee structures, and uncertainty over which transactions will attract charges.
Last month, the UPI Steering Committee set an MDR rate of 0.40 per cent, or 40 basis points, for transactions above Rs 2,000. At this rate, merchants would pay Rs 8 on a transaction of Rs 2,000 and Rs 40 on a payment of Rs 10,000.
MDR is the fee merchants pay for processing digital payments. The proposed charges have drawn opposition amid concerns that businesses could face higher costs during the festive shopping period. There are also fears that some merchants may recover these expenses by raising prices for customers.
On October 8, the Union Minister of Finance, Nirmala Sitharaman, indicated that stakeholders in the payments ecosystem would decide when MDR charges take effect.
Why UPI Fees Differ From Card Payments
The proposed fee structure has triggered objections from merchant groups and political circles, with some industry participants seeking lower rates or a flat fee. Shares of Paytm, MobiKwik and Pine Labs fell 5 per cent on October 9 amid developments around a possible delay in the rollout, according to a report by Moneycontrol.
Unlike card payments, where merchant category codes help determine applicable processing rates, UPI transactions cover a wider range of payment types, including utility bills, loan repayments and capital market transactions. These categories may attract different fee structures.
The distinction also matters because some transactions cannot be completed using credit cards under Reserve Bank of India (RBI) rules. Credit cards are not permitted for loan repayments or capital market transactions in the relevant contexts.
Before UPI gained widespread adoption, consumers commonly used Netbanking, the Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) for such payments. These channels had their own charges, but did not operate under the same MDR structure used for card payments. In some cases, banks charged both the sender and the recipient.
The committee’s decision will determine whether the planned October rollout proceeds or merchants and payment firms will receive additional time to prepare for the new fee structure.
