India may delay UPI merchant fee rollout until January 2027

The Indian government and the National Payments Corporation of India (NPCI) are reportedly considering postponing the implementation of the new Merchant Discount Rate (MDR) framework for UPI transactions. Originally scheduled to begin on October 15, 2026, the rollout may be deferred until January 1, 2027.

The proposed framework introduces charges on select person-to-merchant (P2M) UPI transactions exceeding ₹2,000. Under the plan, a 0.4% MDR would apply to most transactions, capped at ₹300, while specific categories like telecom, fuel, and insurance might face a flat ₹5 fee. Capital market payments would incur a lower rate of 0.02%.

Retailers, fintech companies, and merchant associations have urged the postponement to avoid financial pressure during the peak festive shopping season. Trade bodies, including the All India Mobile Retailers Association (AIMRA), expressed concerns that the additional costs could impact thin profit margins or lead merchants to discourage digital payments in favor of cash. Authorities are also discussing potential exemptions for small businesses with annual turnovers up to ₹40 lakh.