Summary of this article
UPI MDR rollout may shift to January
Proposed MDR is 0.4% above Rs 2,000
Festive season concerns could drive postponement
Unified Payments Interface (UPI) users can expect relief in the coming days as the National Payments Corporation of India (NPCI) has received requests from merchant groups, fintechs and payment companies to delay the rollout of UPI merchant discount rate (MDR) to January 2027. MDR was supposed to be levied on merchant UPI transactions above Rs 2,000 from October 15, 2026.
The MDR on merchant UPI transactions above Rs 2,000 was fixed at 0.40 per cent, subject to a maximum limit of Rs 300. Now, the postponement of UPI MDR to January 2027 would make a significant change in India’s digital payments set-up, where UPI transactions have largely been free.
UPI MDR Rollout May Be Postponed
The NPCI is considering pushing the implementation of UPI MDR by a few months, expectedly to January 2027. However, no final decision has been taken yet; the NPCI is expected to take a final call on this in a couple of days. This delay would also provide banks, payment companies, and merchants with additional time to upgrade their systems and prepare for the new fee structure. It could also help in preventing businesses from passing additional costs on to consumers during the crucial festive shopping period as well.
The festive season in India runs mainly from October to December and there is a sharp increase in consumer spending and digital payments.
What Is The Proposed UPI MDR?
MDR is a fee paid by merchants to banks and other payment intermediaries for processing digital transactions. Under the proposed framework, a 0.40 per cent charge is liable on eligible UPI merchant transactions above Rs 2,000, while peer-to-peer (P2P) payments continue to remain free. The government has also maintained that consumers would not be the ones charged for making UPI payments. This move follows changes to India’s payments legislation that enabled charges to be levied on transactions above Rs 2,000. Merchants have also expressed their concerns about a possibility of higher operating costs during the festive season.
Payment companies and merchants have raised concerns about implementing different MDR rates across various categories of transactions. The complexity is relevant as UPI is used for a wider range of payments than other conventional transaction forms.
UPI’s Wide Scale and Dependency
UPI is India’s one of the most widely-used payment platforms, with more than 500 million users. PhonePe and Google Pay together accounted for almost 80 per cent of UPI transaction value in August 2026 alone. A delay could, therefore, provide the payments ecosystem with additional time to implement the MDR framework without disrupting one of India’s busiest digital payment periods.
What users should know is that the proposed framework is not scrapped, nor is the postponement final. The issue under consideration is the date and timing of implementation, with January 2027 being the most likely date.
