UPI MDR Charges: New Rules May Take Effect Soon After Diwali

The festive season is over, but a possible change in UPI payment rules is drawing attention among traders and retailers. The National Payments Corporation of India (NPCI) is expected to introduce Merchant Discount Rate (MDR) charges on certain UPI transactions, although the final implementation date has not yet been announced.

The revised system was initially scheduled to come into effect on October 15, 2026. However, following requests from traders to avoid additional financial pressure during the festive shopping season, NPCI postponed its implementation until after Diwali.

Traders Seek January 2027 Deadline

Business organisations such as the Confederation of All India Traders (CAIT) and the All India Mobile Retailers Association (AIMRA) are demanding that the proposed charges be introduced from January 1, 2027.

They argue that the period from Dhanteras and Diwali to Christmas and New Year is crucial for retail businesses. Introducing additional transaction costs during this period could reduce already limited profit margins.

According to traders, a 0.4% MDR charge could significantly affect mobile retailers and FMCG distributors. Small shopkeepers may face an additional monthly expense ranging from Rs 2,000 to Rs 12,000.

Who Will Have to Pay MDR?

The proposed charges are expected to apply only to selected merchant-to-merchant? transactions, specifically Person-to-Merchant (P2M) payments. Regular customers will continue to enjoy free UPI transactions, including QR-code payments at shops and money transfers.

Under the proposed framework, merchant payments of Rs 2,000 or less will remain exempt from MDR charges. NPCI has indicated that nearly 96% of merchant transactions in India fall below this threshold, offering protection to most small-value transactions.

There are also discussions about extending relief to smaller businesses. Traders are expecting merchants with an annual turnover of up to Rs 40 lakh to be excluded from the proposed 0.4% MDR charge.

Notification Expected in November

Reports suggest that the revised guidelines could be notified during the second or third week of November. However, neither the final date nor the complete implementation framework has been officially confirmed.

For now, customers need not worry about additional UPI payment charges. The proposed MDR is intended to affect eligible merchant transactions rather than ordinary consumers.