[REVISION HISTORY]

India UPI MDR implementation deferred until after Diwali

Updated 67 times since CLSTR started tracking revisions of this situation.

What changed

2026-10-09 07:36 UTC → 2026-10-13 17:32 UTC · added ~~removed~~

India UPI MDR implementation ~~and merchant resistance~~ deferred until after Diwali

The Unified Payments Interface (UPI) in India is transitioning from a largely free network to a model incorporating a Merchant Discount Rate (MDR) to cover annual operating costs. Effective October 15, 2026, a 0.4% MDR ~~will~~ was scheduled to apply to person-to-merchant (P2M) transactions exceeding ₹2,000, with a maximum cap of ₹300 for transactions of ₹75,000 and above. ~~The National Payments Corporation of India (NPCI) has structured the framework so that approximately 96% of current P2M transactions are expected to remain unaffected.~~ Specific sectors, including fuel, telecom, insurance, and railways, ~~will~~ were set to face a flat ₹5 fee for transactions over ₹2,000. The Finance Ministry stated this flat rate is intended to prevent cost escalation in essential services that handle high volumes with limited margins. Additionally, payments for mutual funds and securities will attract Following intense resistance from the merchant community—including threats of a ~~0.02% MDR, capped at ₹300. Merchants with monthly~~ ‘No UPI ~~receipts under ₹1 lakh remain exempt,~~ Day’ and ~~person-to-person (P2P) transfers will remain free. Resistance from~~ protests by the ~~merchant community is intensifying. The~~ Bharatiya Udyog Vyapar Mandal ~~(BVY)~~ (BVY)—the National Payments Corporation of India (NPCI) has ~~initiated a phased protest, including nationwide demonstrations on October 10 and a ‘No UPI Day’ on October 15. FMCG wholesalers have noted that with net margins often as low as 1.5%,~~ deferred the implementation of these fees. The MDR ~~could significantly reduce profits. While~~ on select P2M transactions will now be postponed until after the ~~government has clarified that MDR is not~~ Diwali festive season, with a ~~charge~~ new implementation date to be ~~collected from customers, traders fear ecosystem disruption. Amidst this tension, Neelkanth Mishra, Executive Director at~~ notified separately. The Confederation of All India Traders (CAIT) welcomed the ~~World Bank Group, suggested at~~ delay, stating it provides “necessary relief to small businesses and MSMEs” during the ~~5th Kautilya Economic Conclave that implementing~~ peak festive and wedding period. While the ~~MDR is “unlikely to cause significant fee increases,” arguing~~ NPCI estimates that ~~intense competition~~ maintaining infrastructure, cybersecurity, and ~~free market dynamics would prevent widespread hikes. RBI Governor Sanjay Malhotra has also stated that~~ fraud prevention requires an annual budget of approximately $2.1 billion, the ~~new fee is “unlikely~~ government has historically prioritized free digital payments to ~~adversely impact~~ reduce cash dependency. Despite the ~~momentum or volume of digital payments.”~~ delay, the proposed framework remains largely unchanged: P2P transfers will remain free, and merchants with monthly receipts under ₹1 lakh will remain exempt.

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