NPCI Defers MDR on Select UPI Transactions until after Diwali
New Delhi, 14th October 2026: The National Payments Corporation of India (NPCI) has deferred the implementation of merchant discount rate (MDR) charges on select UPI transactions until after Diwali, following pushback from industry bodies over the timing of the move during the festive and wedding season.
The charges, originally scheduled to take effect from October 15, will apply to eligible person-to-merchant UPI transactions above Rs 2,000. NPCI said a revised implementation date would be announced separately.
The deferment has been welcomed by retailers, who said introducing additional transaction costs during the peak shopping season could affect already-squeezed margins and require changes to billing systems, accounting processes and staff training.
“The festive quarter is the single most important trading window for apparel retail. UPI has become the default payment mode at store counters, and any change in the cost of accepting it directly affects checkout practices, reconciliation and consumer experience,” said Santosh Katariya, president of the Clothing Manufacturers Association of India.
The Confederation of All India Traders also welcomed the decision, saying the deferment would provide relief to small businesses during the crucial festive and wedding season.
Under the proposed framework, a 0.4% MDR would be levied on eligible UPI transactions above Rs 2,000, with the charge capped at Rs 300 for transactions of Rs 75,000 and above. The fee is payable by merchants, not customers. Person-to-person payments and most routine merchant transactions would continue to remain free.
Industry representatives have urged the authorities to reconsider the Rs 2,000 threshold, arguing that a significant share of apparel purchases, particularly during weddings and festivals, exceeds that amount. Kumar Rajagopalan, executive director and CEO of the Retailers Association of India, said a fixed fee would be preferable to a percentage-based charge, given the pressure on retail margins.
Payment companies also saw their shares recover after NPCI confirmed the deferment. Paytm, which had fallen more than 7% to Rs 1,571, recovered to close at Rs 1,714, up 1.5%. One MobiKwik Systems rose 1.7% to Rs 245 after recovering from a 4% decline, while Pine Labs gained 1.1% to close at Rs 164.80.
