UPI MDR Update: NPCI Delays New 0.4% Merchant Fee on Select UPI Payments Until After Diwali; Check Latest Rule

The proposed merchant discount rate (MDR) on select UPI payments has been postponed until after Diwali, giving merchants and payment companies additional time before the new charges come into effect. The UPI and Services Steering Committee of the National Payments Corporation of India (NPCI) took the decision on October 13, citing the festive season and the need to avoid disruption during a period of heavy retail spending.

UPI MDR Update: NPCI Defers 0.4% Merchant Fee on Select UPI Payments Until After Diwali

NPCI said the revised implementation date would be announced separately. The proposal involves a 0.4% MDR on certain person-to-merchant (P2M) UPI transactions, subject to specified conditions and transaction limits. The postponement means the proposed framework will not be implemented before Diwali as previously expected.

"UPI and Services Steering Committee today decided that, keeping in mind the festive season, Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions shall be implemented immediately post Diwali on a date to be notified separately," NPCI said in a statement.

UPI Fee Structure: How Proposed 0.4% MDR Will Apply to Select Transactions

MDR is a fee associated with processing a merchant payment. Under the proposed UPI framework, a 0.4% charge would apply to select person-to-merchant transactions exceeding Rs 2,000, subject to the categories and conditions specified in the framework.

The proposal does not cover every UPI payment. Person-to-person transfers, such as sending money to friends or family, are outside the proposed merchant fee structure. Most routine merchant payments would also remain unaffected under the framework described in the supplied details.

UPI Charges Update: Check Proposed MDR Rates for Different Payment Categories

The proposed charges vary by merchant category. This means the applicable fee would depend on the type of transaction, its value and the rules specified for that category.

The proposed framework sets out different fee treatments for selected merchant payments. The main categories are as follows:

Select merchant transactions: A proposed MDR of 0.4% would apply to eligible person-to-merchant UPI payments above Rs 2,000, subject to a cap of Rs 300 per transaction.

Railways, telecom, fuel and insurance: Eligible transactions above Rs 2,000 in these categories would attract a proposed flat fee of Rs 5 per transaction instead of the percentage-based charge.

Mutual funds and stockbroking: The proposed MDR for eligible payments in these categories is 0.02%, subject to a cap of Rs 300 per transaction.

Person-to-person transfers: Transfers between individuals would remain outside the proposed MDR framework.

These are the proposed terms described in the available details. Merchants and consumers should check NPCI's final notification for confirmation of the applicable categories, thresholds, exemptions and charges when the implementation date is announced.

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