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UPI Merchant Charge Pushed to January

The implementation of the proposed 0.4 percent Merchant Discount Rate (MDR) on select high-value UPI transactions, originally scheduled for October 15, 2026, is expected to be postponed to January 1, 2027, following concerns raised by merchant associations.

Nilakshi Barman | | 1 min read

UPI Merchant Charge Pushed to January
AI generated image | Minutebrief Team

In Brief

  1. Authorities are deferring the implementation of the proposed 0.4 percent merchant fee on UPI payments from October 15, 2026, to January 1, 2027.
  2. The extension is intended to protect retailers from additional transaction costs during peak festive shopping, providing businesses and payment aggregators more time to adapt.
  3. The proposed MDR applies strictly to Person-to-Merchant (P2M) transactions above ₹2,000, ensuring peer-to-peer transfers and general consumer payments remain entirely free of charge.

The National Payments Corporation of India (NPCI) and the central government are set to defer the rollout of the proposed Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions from October 15, 2026, to January 1, 2027, according to official discussions.

The decision comes after various trader bodies and merchant groups voiced strong opposition to introducing payment processing fees at the onset of the peak festive shopping season. The proposed framework levies a nominal 0.4 percent MDR on Person-to-Merchant (P2M) transactions exceeding ₹2,000, with a maximum fee cap of ₹300 for payments reaching or exceeding ₹75,000. Small vendors under the Person-to-Person-Merchant (P2PM) category and transactions below the ₹2,000 threshold remain completely exempt from any charge, ensuring consumers face no extra costs for daily purchases.

The multi-month postponement offers immediate cost relief to retailers expecting high sales volume over the coming weeks, while granting payment aggregators additional time to update system infrastructure. Stakeholders and industry regulators are expected to issue formal guidelines and final operational instructions ahead of the revised January 1 implementation date.

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