UPI transactions above ₹2,000: 0.4% MDR deferred until after Diwali, says NPCI

UPI MDR: The 0.40% merchant discount rate (MDR) on UPI transactions above ₹2,000 has been pushed and will come into effect after Diwali, the NPCI said in a statement today.

Notably, this comes amid a number of trader unions and groups urging the government to remove the new charge, which was due to come into effect from 15 October. Used by over 50 crore people, Alphabet's Google Pay and Walmart's PhonePe held around 80% of market ​share by value of UPI transactions in August, as per a Reuters report.

“UPI and Services Steering Committee today decided that, keeping in mind the festive season, MDR on select Person-to-Merchant (P2M) UPI transactions, shall be implemented immediately post Diwali at a date to be notified separately,” the statement read.

The NCPI in a statement said that the postponement comes as consideration of the festive period. Notably, Diwali 2026 will be celebrated across India on November 8. Diwali marks a period of extended festivities, with shoppers expected to spend on clothes, cars, gold and home appliances during the auspicious time.

October to December is considered as the “festive” period in India due to a number of religious and regional festivals including Durga Puja, Dussehra, Diwali, Christmas and New Year.

It remains to be seen when the UPI MDR charge will come into effect as no subsequent later date was mentioned in the NPCI statement.

The Confederation of All India Traders (CAIT) in a statement welcomed the Centre's decision to defer the proposed MDR charges on UPI transactions. National general secretary Praveen Khandelwal called the decision “timely and pragmatic, particularly during the crucial festive and wedding season, when millions of traders and MSMEs depend on higher business volumes”.

“Additional transaction costs could have placed an avoidable burden on merchants operating on thin margins and discouraged the wider acceptance of digital payments,” he added.

“We sincerely thank Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for understanding the concerns of traders and taking a positive decision. CAIT supports digital payments, but the system must remain affordable and sustainable for merchants, especially small businesses. This deferment will strengthen traders’ confidence and reinforce the Government’s partnership with the trading community in building a stronger Digital India,” he said in the statement.

The NPCI in an announcement has month said that MDR would apply on person-to-merchant (P2M) UPI payments, above ₹2,000, with effect from 15 October 2026, under a revised UPI MDR framework.

The rules kept UPI free for all customer (person-to-person / P2P) transactions, 95% of low-value UPI transactions below ₹2,000 and small merchant transactions (P2PM) completely free. It also proposed a new fund to support the expansion of UPI acceptance among small merchants.

The finance ministry had in September said that this framework has been introduced under the Payment and Settlement Systems Act, 2007, following “detailed deliberations by the UPI Steering Committee on the applicable rates, operational arrangements and consumer safeguards”.

“Revenue generated from larger merchant transactions will support banks, payment service providers and UPI application providers in expanding and improving payment infrastructure, including in rural and semi-urban areas,” it added.

What are the slabs for UPI MDR charge?

• Flat MDR of ₹5 per transaction will apply to UPI payments above ₹2,000 in specified merchant categories — essential and thin-margin sectors — such as railways, telecom services, insurance, fuel and agricultural inputs.
• MDR of 0.4% applicable on P2M UPI transactions above ₹2,000.
• For transactions of ₹75,000 and above, the MDR will be capped at ₹300 per transaction.
• Payments relating to mutual funds, securities, stockbrokers and dealers will attract an MDR of 0.02%, capped at ₹300 per transaction.

Jocelyn Fernandes is a journalist and editor with nearly 13 years of experience covering the business, corporate, economy and markets beats in news.<br> As chief content producer for around three years at Livemint (Hindustan Times), Jocelyn publishes breaking stories, explainers, features and live blogs on a range of business and economy topics, including the Budget, corporate developments, stock markets, income tax, money and personal finance, cryptocurrency, government policy, impact of US tariffs, international developments and more.<br> Jocelyn's writing philosophy is focused on delivering news in an accurate and accessible format for readers. She thus focuses her news coverage on explainers and FAQs in order to breakdown business, corporate, economic, and policy topics that are of importance to everyday readers.<br> She holds a Bachelors in Mass Media (BMM) and Post Graduate Diploma (PGD) in Journalism and Communication and has previously written for online business and markets news site Moneycontrol (Network18), Business-to-business (B2B) trade publications — the industry magazines Power Today and Solar Today (ASAPP Media), and the national news agency United News of India (UNI).<br> Outside of work, Jocelyn keeps up-to-date with local and international news, enjoys reading fiction books, novels and short stories, and enjoys movies, travelling and art. <br> She can be found on X and LinkedIn, and reached by email: <a href="jocelyn.fernandes@htdigital.in">jocelyn.fernandes@htdigital.in</a> <br> X/ Twitter handle: <a href="https://x.com/scribeJocelyn">@scribeJocelyn</a> <br> LinkedIn: <a href="https://in.linkedin.com/in/jocelyn-fernandes-journalist">LinkedIn</a>

Catch all the Instant Personal Loan, Business Loan, Business News, Money news, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

✕

Wait for it…

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.