A decision on the proposed merchant discount rate (MDR) framework for select person-to-merchant (P2M) UPI transactions is expected by Sunday, November 15, sources said.
The development followed the National Payments Corporation of India’s (NPCI) decision to postpone the revised framework, which was scheduled to take effect on October 15, 2026. NPCI deferred the rollout in view of the festive season and Diwali.
NPCI had earlier said the MDR on select P2M UPI transactions would be introduced immediately after Diwali, with the revised date to be notified separately.
Under the proposed framework, an MDR of 0.4 per cent will apply to specified P2M UPI transactions above Rs 2,000. The charge will be capped at Rs 300 per transaction for payments of Rs 75,000 and above, while separate rates will apply to certain sectors.
A merchant receiving Rs 5,000 through UPI will incur a charge of Rs 20, while a Rs 50,000 payment will attract Rs 200. Person-to-person (P2P) UPI transfers will remain free.
The Centre and NPCI said customers will not be charged directly. Transactions of up to Rs 2,000 will continue to attract zero MDR, and more than 96 per cent of UPI merchant transactions fall in this category, NPCI said.
The Centre said merchants earning up to Rs 1 lakh a month through UPI QR codes will continue to pay no charges. Charges for essential services have been capped at Rs 5, it said.
On September 28, the Supreme Court refused to grant an interim stay on the Centre’s decision to introduce MDR on specified high-value P2M UPI transactions. A Bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana issued notices to the Centre, the Reserve Bank of India, NPCI and the UPI and Services Steering Committee, seeking responses within four weeks.
The Centre said the proposed framework aimed to ensure the long-term financial sustainability of UPI and support payment infrastructure, cybersecurity and services for small merchants, particularly in Tier III to Tier VI towns and rural areas.
