UPI MDR rollout deferred beyond Diwali

Bengaluru: Implementation of the merchant discount rate (MDR) on select Unified Payments Interface (UPI) transactions has been pushed beyond Diwali, and a final date will be communicated soon to stakeholders, the National Payments Corporation of India (NPCI) said in a statement on Tuesday.


NPCI framework, announced on September 15, was scheduled to take effect on October 15. It prescribed a 0.4% fee on eligible bank account-funded merchant payments above Rs 2,000, capped at Rs 300 per transaction.


The postponement follows representations from merchant associations seeking relief during the festive sales season. The All India Mobile Retailers Association and the All India Consumer Products Distributors Federation sought a deferment, a higher small-merchant exemption threshold and exemption for merchant-to-merchant transactions, ET reported.

Under the September framework, payments up to Rs 2,000 and person-to-person transfers remain free. Qualifying small merchants are also exempt, and merchants cannot pass the fee to customers.

NPCI has said MDR income would support merchant expansion, payment infrastructure and fraud prevention. The delay would push back this revenue for banks and payment companies.

ET first reported the restoration plan on July 16 and the likely 40-basis-point rate on September 11. Bank account-funded UPI payments have carried zero MDR since January 2020.