NPCI Defers UPI Merchant Fees Until After Diwali

The National Payments Corporation of India (NPCI) has deferred the implementation of the Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions until after Diwali. Originally scheduled for October 15, the rollout was postponed after trade bodies, including the All India Mobile Retailers Association and the All India Consumer Products Distributors Federation, requested relief during the festive sales season.

The proposed framework introduces a 0.4% fee on eligible bank account-funded P2M payments exceeding ₹2,000, with a cap of ₹300 for transactions of ₹75,000 and above. Essential services will incur a flat ₹5 fee for transactions over ₹2,000. Person-to-person transfers, payments under ₹2,000, and small merchants with monthly transactions below ₹1 lakh remain exempt. NPCI rules prohibit merchants from passing these fees to customers, and the agency stated that revenue will support payment infrastructure, fraud prevention, and merchant expansion.

The announcement caused initial volatility for fintech stocks, including Paytm, Pine Labs, and One Mobikwik Systems, which saw shares plunge up to 7% before some recovered. Following meetings with Finance Minister Nirmala Sitharaman, trade bodies withdrew calls for protests after receiving assurances that their concerns would be considered.