MDR on select UPI merchant transactions to be implemented after Deepawali

The Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) Unified Payments Interface (UPI) transactions will be implemented after Diwali, the National Payments Corporation of India (NPCI) said on Tuesday. The UPI and Services Steering Committee decided to defer the implementation until after the festive season, with the specific date to be notified separately.The decision comes as businesses and consumers prepare for the festive period, when digital payment transactions typically play an important role in retail activity.
MDR is a fee associated with processing merchant payments. The NPCI announcement specifies that the proposed implementation will apply to select P2M UPI transactions. However, it does not specify in the statement which merchant categories or transaction types will be covered, the applicable rates, or who will bear the cost. Further details, including the implementation date and the scope of the transactions covered, are awaited.
MDR is a fee charged to merchants for processing digital payments. The proposed move will apply only to select merchant transactions, though the statement did not specify which categories of transactions would attract the charge.The MDR framework came after the Parliament cleared the Taxation and Other Laws (Amendment) Bill, 2026 on August 11, amending Section 10A of the Payment and Settlement Systems Act, 2007, to give the government the power to permit charges on specified digital payment modes.
The National Payments Corporation of India is the umbrella organisation responsible for operating retail payment and settlement systems in the country. Established by the Reserve Bank of India and the Indian Banks’ Association, NPCI develops and operates digital payment infrastructure to improve efficiency, accessibility and financial inclusion. Its payment products include UPI, RuPay, the National Automated Clearing House (NACH), Immediate Payment Service (IMPS), National Electronic Toll Collection (NETC), Aadhaar Enabled Payment System (AePS) and e-RUPI.