UPI MDR Rollout From October 15 May Be Pushed To January 2027 As Industry Seeks More Time
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The implementation date for the new UPI merchant fee structure is under review after industry participants sought additional time, with a shift to January 2027 among the requests before NPCI.
The rollout of merchant discount rate (MDR) on select UPI payments from October 15 may be pushed to January 2027 after industry participants sought more time to implement the new fee structure, according to a Moneycontrol report. The National Payments Corporation of India (NPCI) has received requests for a deferment and is discussing the matter with the government, though no final decision has been taken yet.
The new structure, scheduled to take effect in a week, provides for an MDR of 0.4% on specified merchant UPI transactions above ₹2,000, capped at ₹300 per transaction. Person-to-person transfers will remain free, while most merchant payments will also remain unaffected. Industry participants have sought additional time amid concerns over preparedness and the implementation of different rates across transaction categories. Unless NPCI announces a change, October 15 remains the effective date.
A decision on whether the implementation will be shifted to January 2027 is expected as the deadline approaches.
UPI MDR Implementation From October 15
The MDR structure has different rates depending on the type of transaction. The standard rate has been fixed at 0.4%, or 40 basis points, for specified merchant transactions above ₹2,000, subject to a maximum charge of ₹300.
Certain categories, including railways, telecom, insurance, fuel, agricultural inputs and utility payments, will attract a flat MDR of ₹5 on eligible transactions above ₹2,000. Payments towards mutual funds and securities, including transactions through stockbrokers and dealers, will attract an MDR of 0.02%, capped at ₹300.
Person-to-person UPI transfers will continue to remain free irrespective of the transaction value. Merchant transactions of up to ₹2,000 will also remain outside the standard 0.4% MDR, while small merchants covered by the zero-MDR structure will continue to be exempt.
The government has said around 96% of person-to-merchant UPI transactions will remain unaffected by the changes. The MDR will be levied on merchants and cannot be passed on to customers.
The implementation has faced opposition from sections of the trading community ahead of the October 15 deadline. Traders had sought a deferment, including on the grounds that the change was coming during the festive season.
The Supreme Court had also declined to stay the implementation while issuing notices to the Centre, Reserve Bank of India and NPCI on a petition challenging the new MDR structure.
NPCI is now discussing the latest requests for additional time with the government. Until a revised date is formally announced, the new MDR structure remains scheduled to come into effect from October 15.
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Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
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