UPI MDR Rollout May Be Delayed Until January 2027
NPCI may defer the proposed 0.4% MDR on UPI transactions above Rs 2,000 as merchants and payment firms seek clarity before the festive season ends.
The rollout of a proposed 0.4% merchant discount rate (MDR) on UPI transactions above Rs 2,000 could be delayed until January 2027, as the National Payments Corporation of India (NPCI) considers requests from merchants and payment companies.
The charge was scheduled to take effect from October 15, 2026, but industry players have reportedly sought more time over concerns about varying MDR rates, transaction categories and system readiness. NPCI is expected to take a decision shortly after discussions with the finance ministry.
At 0.4%, the proposed MDR would amount to Rs 8 on a Rs 2,000 transaction and Rs 40 on a Rs 10,000 payment. The fee is paid by merchants to banks for processing digital transactions.
A key concern is that UPI MDR rates are not uniform across categories. Utility payments, loan repayments and capital market transactions can attract different rates or flat charges, creating uncertainty for businesses.
Loan repayments have emerged as another sticking point. While certain auto-debit loan payments carry a proposed Rs 5 flat fee, questions remain over how failed auto-debits followed by manual repayments should be classified.
A delay would give merchants and payment firms more time to adapt systems and clarify the rules. For consumers, it could mean the proposed charge does not begin during the festive sales period. For now, however, the January rollout remains a possibility, not a confirmed decision.
