The National Payments Corporation of India (NPCI) has postponed the planned introduction of Merchant Discount Rate (MDR) charges on certain UPI transactions until after Diwali. The decision was taken during the UPI Steering Committee meeting held on October 13, 2026.
The revised implementation date has not yet been officially announced. While some reports have suggested that the charges could be introduced in the second week of November, NPCI has not confirmed this timeline.
The rules were originally scheduled to take effect on October 15, 2026. However, the postponement does not mean the proposed charges have been cancelled. The final date and details of implementation are still awaited.
Which UPI Transactions Will Be Affected by MDR Charges?
Under the proposed framework described in the announcement, ordinary customers will not have to pay a separate fee for routine UPI transactions. Money transfers between individuals will continue to remain free, regardless of the amount.
Merchant transactions of up to ₹2,000 will also remain exempt from MDR charges. In addition, small shopkeepers receiving up to ₹1 lakh per month through UPI QR code payments will continue to benefit from the stated exemption under existing regulations.
The government estimates that approximately 96% of merchant UPI transactions will remain unaffected by the proposed changes. As a result, most everyday purchases and small-value payments are expected to continue without any change for customers.
Merchants will also not be permitted to recover MDR charges from customers by imposing a separate UPI transaction fee. The actual impact on businesses will depend on their payment category and the applicable charges under the final framework.
Why Is NPCI Planning to Introduce MDR Charges?
MDR charges were waived for several years to encourage the adoption of digital payments through UPI. However, the growing volume of transactions has increased the operational demands on banks and payment service providers that maintain the payment infrastructure.
The proposed charges are intended to apply to selected merchant payment categories rather than all UPI transactions. Although the revised MDR structure was announced in September 2026, its implementation was deferred because of the festive season.
The exact categories of transactions that will attract charges, along with the applicable rates and implementation date, will need to be confirmed through the official announcement.
What the UPI MDR Update Means for Customers and Merchants
For regular customers, the proposed changes are not expected to bring significant alterations to everyday UPI payments. Person-to-person transfers will remain free, while the stated exemptions will continue to protect eligible merchant transactions.
Businesses, however, may need to review their payment categories and determine whether the revised MDR rules apply to them once the final framework comes into effect.
For now, the implementation has been delayed rather than withdrawn. Customers and merchants will need to wait for NPCI’s official announcement after Diwali to understand the final timeline and the transactions covered by the new charges.
Disclaimer: This article is intended for general informational purposes only and is based on the information provided about the proposed MDR changes. The implementation date, applicable rates, exemptions and transaction categories may be subject to official clarification or revision. Customers and merchants should refer to announcements from NPCI and other relevant authorities for the latest confirmed details.