Merchant associations request delay of UPI MDR overhaul till after festivals

Delhi, 8 October – A group of merchant bodies has petitioned NPCI to postpone the introduction of its new UPI Merchant Discount Rate framework, originally scheduled for 15 October. The coalition fears that the timing could adversely affect sales during the high‑spending festive season.

The proposed MDR model will impose a flat INR 5 fee on UPI transactions above INR 2,000 for selected categories, while larger person‑to‑merchant payments will be charged at a rate of 0.4%, subject to a maximum of INR 300. NPCI contends that the changes will affect only about four percent of merchant transactions, with more than 95 percent of P2M UPI payments staying outside the fee structure. The zero‑MDR provision will continue for small merchants utilizing a peer‑to‑peer model.

To promote UPI uptake among smaller traders, NPCI has earmarked five percent of the total MDR collections for a special fund aimed at enhancing digital payment infrastructure, cybersecurity, and innovation. The fund’s proceeds will be distributed among participating companies to further the ecosystem.

The merchant groups argue that imposing MDR charges before Diwali could dampen consumer enthusiasm, prompting their request for a deferment until after the holiday period and the early months of the next fiscal year. Regular users will retain free UPI access with no monthly caps, and NPCI has urged banks to prevent merchants from shifting MDR liabilities onto customers.