UPI MDR rollout may be pushed to January from October 15, report says

The Centre is reportedly considering delaying the introduction of the Merchant Discount Rate (MDR) on high-value Unified Payments Interface (UPI) transactions by a few months, with the new charges potentially coming into effect in January instead of October 15.

Reuters reported the possible postponement, citing an industry executive and a regulatory official familiar with the discussions. Moneycontrol was the first to report the proposed delay.

The National Payments Corporation of India (NPCI) is yet to take a final decision, one of the sources told Reuters. A decision could be made in the coming days.

A postponement would give payment companies more time to update their systems and help avoid implementation challenges during India's festive season, according to the sources, who were not identified.

How the proposed MDR charges would work

Under the new framework, merchants accepting UPI payments exceeding ₹2,000 would be subject to charges, with the applicable rate depending on the category of merchant.

For most person-to-merchant (P2M) transactions above ₹2,000, the MDR would be 0.4% of the transaction value, capped at ₹300 per transaction. Four specified categories, however, would attract a flat fee of ₹5 per transaction.

These categories are railway services, telecom services, insurance and fuel.

For example, a ₹10,000 UPI payment made at a railway ticket counter, to a telecom operator, an insurer or a fuel outlet would attract a ₹5 charge for the merchant. The same payment to another merchant would incur a charge of ₹40, calculated at 0.4% of the transaction value.

The proposed framework exempts person-to-person (P2P) UPI transfers, P2M payments of up to ₹2,000, person-to-person merchant (P2PM) payments and all RuPay debit card transactions.

P2PM refers to payments received through UPI QR codes by small vendors whose monthly receipts directly into their bank accounts do not exceed ₹1 lakh.

Legal changes enabling the charges

Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026, on August 11. The legislation amended Section 10A of the Payment and Settlement Systems Act, 2007, giving the government the power to permit charges on specified digital payment methods.

The new MDR framework was introduced last month, setting out the proposed fee structure for eligible UPI transactions above ₹2,000.

If the reported postponement goes ahead, the revised implementation date would give payment firms additional time to prepare their systems before the charges take effect. However, the NPCI's final decision on the timing remains pending.