India Considers Delaying New UPI Merchant Fees

The National Payments Corporation of India (NPCI) is considering postponing the implementation of merchant discount rates (MDR) on Unified Payments Interface (UPI) transactions from October 15, 2026, to January 1, 2027. The potential delay follows requests from fintech companies and retail traders' associations who cited inflation concerns and policy confusion. The UPI and Services Steering Committee is also evaluating expanded exemptions for businesses with annual turnovers up to ₹40 lakh.

Sanjay Malhotra, Governor of the Reserve Bank of India, previously stated that the fees are unlikely to significantly impact transaction volumes. The proposed framework introduces a 0.4% MDR on person-to-merchant (P2M) transactions exceeding ₹2,000, capped at ₹300 for transactions of ₹75,000 and above. Certain categories, such as education and utilities, would face a flat ₹5 fee. Person-to-person transfers and P2M transactions under ₹2,000 remain free.

The Department of Financial Services clarified that merchants must bear these costs and cannot pass them to consumers. Revenue will be used to fund cybersecurity, infrastructure, and innovation. News of the potential delay caused shares of payment aggregators, including Paytm, Mobikwik, and Pine Labs, to drop by up to 10%. Separately, Governor Malhotra addressed the Indian rupee's depreciation toward a record low of 96.96 against the US dollar, pledging that the central bank will ensure currency stability.