NPCI to Charge MDR on Large UPI Merchant Payments
National Payments Corporation of India will implement merchant fees on UPI transactions over ₹2,000 following the Diwali festive season to recover infrastructure costs.
The National Payments Corporation of India (NPCI) is preparing to implement a Merchant Discount Rate (MDR) on select person-to-merchant (P2M) UPI transactions exceeding ₹2,000. Originally scheduled for October 15, 2026, the rollout was deferred by the UPI and Services Steering Committee to avoid increasing costs during the festive season. The NPCI stated that charges would begin immediately after Diwali, though a formal date has not been announced and some reports suggest a possible delay until January 2027.
Under the framework, eligible P2M transactions over ₹2,000 will incur a 0.4% MDR, capped at ₹300 for payments of ₹75,000 and above. Concessional rates apply to capital market transactions at 0.02% and essential services—including railways, fuel, telecom, and insurance—at a flat fee of ₹5. Person-to-person (P2P) transfers and merchant payments up to ₹2,000 will remain free.
The Ministry of Finance clarified that the MDR is a merchant-side fee and must not be passed on to customers. The initiative aims to recover annual infrastructure costs estimated at ₹20,000 crore. Despite the planned rollout, merchants are currently seeking a revised implementation date from the NPCI.
