UPI MDR implementation: Decision likely by November 15 after rollout postponement

New Delhi: A decision on the Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions is likely to be taken by November 15, 2026, sources told Zee Business. The development follows the decision by the National Payments Corporation of India (NPCI) to defer the implementation of revised MDR charges on Person-to-Merchant (P2M) transactions beyond the originally planned October 15 rollout.

The decision to delay was reportedly influenced by heightened industry discussions around the reintroduction of MDR on certain categories of UPI transactions and its likely impact on merchant payments, fintech companies and the digital payments ecosystem.

The UPI and Services Steering Committee had decided that MDR on these transactions would be implemented immediately after Diwali, with the exact effective date to be notified separately.

Merchant Discount Rate (MDR) is a merchant-side transaction fee that will be borne by the merchant receiving the payment, while the customer making the UPI transaction will remain unaffected.

The government has clarified that customers would not have to bear the cost of MDR. Person-to-Person (P2P) transactions will continue to remain free, while P2M transactions of up to Rs 2,000 will also remain outside the MDR framework. This means consumers will continue to use UPI without paying any transaction charges.

Under the revised UPI framework, transactions of Rs 2,000 or lower would attract zero MDR. Also, transactions covered under the zero-MDR framework for small merchants will remain free. The category covers small vendors receiving up to Rs 1 lakh per month through UPI QR payments directly into their bank accounts. This brings approximately 96 per cent of total P2M transactions outside the scope of MDR.

Also, select merchant categories, including railways, telecom services, insurance and fuel purchases, would attract a flat MDR of Rs 5 on UPI transactions exceeding Rs 2,000.

For P2M transactions of Rs 75,000 and above, the MDR will be capped at Rs 300.

Transactions in the capital market, including stockbroking, mutual funds and securities, would attract an MDR of 0.02 per cent, capped at Rs 300, for transactions above Rs 2,000.

Note that automated recurring payments enabled through e-mandates will remain outside the MDR framework. These may include monthly subscriptions, utility bills, insurance premiums, etc.