Traders urge NPCI to delay UPI MDR rollout past Oct 15 deadline
Synopsis
Traders' bodies want NPCI to press pause on the new UPI MDR rules just days before the 15 October rollout — arguing a festive-season launch is the worst possible timing. With 4% of merchant transactions in scope and a tiered fee structure that caps charges at ₹300, the real question is whether NPCI blinks or holds the line.
Key Takeaways
Trade associations have formally asked NPCI to defer the new UPI MDR framework beyond the scheduled 15 October 2026 launch.
Merchants propose delaying the charges until after the festive season or into early 2027 .
Under the new rules, large-merchant UPI payments above ₹2,000 will attract a fee of 0.4 per cent , capped at ₹300 ; select categories face a flat ₹5 levy.
NPCI estimates the framework will affect only about 4 per cent of merchant transactions; over 95 per cent remain MDR-free.
Small merchants on peer-to-peer models will continue to enjoy zero MDR .
5 per cent of MDR collections will be earmarked for a fund to promote UPI adoption among small merchants.
Traders' bodies have formally requested the National Payments Corporation of India (NPCI) to defer the implementation of the revised merchant discount rate (MDR) framework for Unified Payments Interface (UPI) transactions, currently scheduled to take effect on 15 October 2026. Trade associations have proposed pushing back the new charges until after the festive season or into early next year, according to reports citing sources familiar with the matter.
What Merchants Are Asking
Industry bodies have argued that introducing additional payment costs during a peak retail period could disproportionately hurt merchants managing high transaction volumes. The festive season — spanning October and November — is typically among the busiest quarters for consumer spending in India, making it a particularly sensitive window for any structural change to payment economics.
NPCI, which designed the revised MDR framework in consultation with industry stakeholders, has not yet announced a decision on whether to defer or proceed with the rollout as planned.
How the New MDR Structure Works
Under the revised framework, a flat levy of ₹5 will apply to select merchant categories for UPI payments exceeding ₹2,000. For large merchants, UPI payments above ₹2,000 will attract a fee of 0.4 per cent, capped at ₹300 per transaction.
Capital-market transactions — including mutual funds and securities — will face a lower MDR of 0.02 per cent, also subject to a ₹300 cap. Notably, NPCI estimates that the changes will affect only approximately 4 per cent of merchant transactions, leaving more than 95 per cent of person-to-merchant UPI payments outside the MDR framework entirely.
Who Is Exempted
Small merchants operating on peer-to-peer merchant models will continue to benefit from zero MDR. Individual users face no monthly quota or ceiling on free UPI usage, meaning retail consumers can continue transacting without incurring MDR charges within the applicable free framework. Banks have been directed to ensure that merchants do not pass MDR costs on to customers.
Revenue Allocation and the Promotion Fund
The revised structure introduces a dedicated fund to expand UPI acceptance among smaller merchants: 5 per cent of total MDR collections will be earmarked for this initiative. The remaining MDR revenue will be distributed among ecosystem players — banks, payment service providers, and the infrastructure layer — and is intended to support UPI expansion, cybersecurity improvements, and payment innovation.
What Comes Next
With the 15 October deadline approaching, the key question is whether NPCI will hold firm or concede a deferral. A delay would provide merchants more preparation time but risks further uncertainty over the long-term sustainability of the zero-MDR model that has underpinned UPI's rapid adoption. Industry observers expect a decision from NPCI in the coming days.
Point of View
And they are using it. But the MDR debate has a longer arc — UPI's zero-cost model has been fiscally unsustainable for banks and payment intermediaries for years, and NPCI's revised framework is a structural correction, not a revenue grab. The real risk in a deferral is that 'after the festive season' becomes 'indefinitely', as political economy repeatedly makes it harder to introduce charges that consumers and merchants have been conditioned to expect for free. NPCI's credibility as a rule-setter depends partly on whether it can hold a notified deadline.
NationPress
8 Oct 2026
Frequently Asked Questions
What is the new UPI MDR framework that traders want deferred?
It is a revised merchant discount rate structure designed by NPCI, scheduled to take effect on 15 October 2026, that introduces tiered fees on certain UPI transactions above ₹2,000. Large merchants will pay 0.4 per cent per transaction, capped at ₹300, while select merchant categories face a flat ₹5 levy.
Why are traders asking for a deferral of the UPI MDR rollout?
Trade associations argue that launching new payment charges during the festive season — one of the busiest retail periods of the year — will disproportionately impact merchants handling high transaction volumes. They have proposed delaying implementation until after the season or into early 2027.
Will ordinary UPI users be charged under the new MDR rules?
No. Individual users face no MDR on their UPI payments, and there is no monthly cap or quota on free UPI usage. Banks have also been directed to ensure merchants do not pass MDR costs on to customers.
Which merchants are exempt from the new UPI MDR?
Small merchants using peer-to-peer merchant models will continue to pay zero MDR. NPCI estimates that over 95 per cent of person-to-merchant UPI transactions will remain outside the new framework, with only about 4 per cent of merchant transactions affected.
Has NPCI agreed to postpone the UPI MDR implementation?
As of 8 October 2026, NPCI has not announced a decision on deferral. The corporation designed the revised framework in consultation with stakeholders and a response to the trade bodies' request is expected before the 15 October deadline.
