UPI MDR fee: Why did the govt decide to implement charges after Diwali 2026?
The Merchant Discount Rate (MDR) on select person-to-merchant (P2M) Unified Payments Interface (UPI) transactions will be implemented after Diwali 2026, according to an announcement by the National Payments Corporation of India (NPCI) on October 13.
The decision comes amid the ongoing festive season, when digital payments are widely used for shopping, dining and other everyday purchases.
The UPI and Services Steering Committee discussed the matter and decided to defer the implementation until immediately after Diwali. The exact implementation date will be announced separately.
The decision was taken after considering the festive season, allowing merchants and customers to continue their usual payment activities during this busy period.
Why has the UPI MDR fee been deferred?
According to NPCI, the decision was taken keeping the festive season in mind, particularly Diwali, which is an important period for retailers and businesses as consumer spending and merchant transactions typically increase.
Introducing charges on select merchant transactions during this period could have affected how businesses prepare for payments and manage transaction-related costs. To avoid introducing the change during the festive rush, the committee has decided to implement it after Diwali.
However, NPCI has not yet announced an exact implementation date or timeline. Further details are awaited. The decision to defer the implementation does not mean the proposed charges have been cancelled.
What should UPI users and merchants know?
MDR is a fee associated with processing merchant payments. The latest announcement concerns only select person-to-merchant (P2M) UPI transactions, not all UPI payments.
Customers and businesses should await detailed guidelines and further official announcements to understand which transactions will attract charges and how the changes will be implemented.
Basics of NPCI
NPCI is the umbrella organisation responsible for operating retail payment and settlement systems across the country and manages UPI and several other digital payment services. It was established by the Reserve Bank of India and the Indian Banks' Association.
Merchants and users should watch for NPCI's subsequent announcements regarding the implementation date and the categories of transactions covered. Until further details are released, the scope and practical impact of the proposed MDR charges remain unclear.