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NPCI has postponed the planned rollout of merchant discount rates (MDR) on selected person-to-merchant (P2M) UPI payments until after Diwali. The decision, announced on October 13, 2026, came two days before the reported October 15 start date. It is a delay, not a cancellation, and no replacement date had been announced in the reports available that day.
For customers, the immediate position is unchanged: the proposed MDR is described as a charge on eligible merchants, not a new fee added to ordinary UPI payments. Government guidance also says person-to-person (P2P) UPI transfers remain free.
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What NPCI decided on October 13
NPCI’s UPI and Services Steering Committee deferred the planned MDR rollout for selected P2M transactions until after Diwali. The original start date reported before the decision was October 15, 2026. NPCI managing director and chief executive Dilip Asbe told Mint: “We have deferred the rollout until after Diwali. The final date will be announced soon.”
That wording matters. NPCI has postponed implementation, but it has not withdrawn the proposal. As of October 13, the reports did not give a new launch date, and they did not confirm whether the proposed rate, cap or merchant categories would change.
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What changes for UPI customers?
No new customer fee is established
The reported MDR is a merchant-side charge for selected P2M payments. It is not reported as a direct transaction fee that UPI customers must pay when they scan a QR code or use a UPI app. The Ministry of Finance has separately stated that consumers will not face UPI transaction charges.
P2P transfers remain free
Person-to-person payments—such as sending money to a family member, friend or another individual—remain free under the government’s stated policy, regardless of the amount. The deferral does not change that position.
The ₹2,000 P2M rule remains important
A September 15, 2026 government release says P2M payments up to ₹2,000 have zero MDR. The proposed change was aimed at eligible merchant transactions above that threshold, not at every UPI payment. Customers should therefore distinguish between the payment type and amount rather than assume that every UPI transaction will attract a fee.
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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →| Payment situation | Position stated in the available guidance |
|---|---|
| P2P transfer of any amount | Free |
| P2M payment up to ₹2,000 | Zero MDR |
| Eligible P2M payment above ₹2,000 | Proposed merchant-side MDR; final implementation is not yet confirmed |
What shops should expect
Reported proposal: 0.4% above ₹2,000
Same-day coverage reported a proposed MDR of 0.4% for eligible P2M UPI transactions above ₹2,000. For a ₹10,000 qualifying payment, that rate would amount to ₹40 before considering any applicable operational arrangements. This is the reported proposal, not a confirmed final tariff after the deferral.
Reported cap at ₹300
The proposal was reported to cap the charge at ₹300 for transactions of ₹75,000 and above. At the stated rate, 0.4% of ₹75,000 is ₹300, so the cap limits the MDR on larger qualifying payments. Whether this cap survives unchanged has not been established.
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| Reported transaction band | Reported MDR treatment | Status after deferral |
|---|---|---|
| Up to ₹2,000 (P2M) | Zero MDR under the September government release | Government position stated; no change announced |
| Above ₹2,000, eligible P2M | 0.4% proposed | Proposed; rollout postponed |
| ₹75,000 and above, eligible P2M | Charge capped at ₹300 in the proposal | Proposed; final cap unconfirmed |
Merchants get preparation time, not certainty
The postponement gives shops additional time to review payment costs, reconcile settlement reports and discuss arrangements with their acquiring bank or payment provider. It does not establish that every shop will pay MDR. The reports reviewed did not specify the final merchant-category coverage or exemptions, so businesses should not apply the proposed rate to all UPI receipts.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to interpret the delay by transaction type
- Identify the payer and payee. A transfer to another individual is P2P; a payment to a business is P2M.
- Check the amount. The government’s September guidance sets zero MDR for P2M payments up to ₹2,000.
- For amounts above ₹2,000, wait for the final rule. The 0.4% rate and ₹300 cap were reported proposal terms, while the implementation date and detailed eligibility remain unsettled.
- Do not add a customer surcharge automatically. The available government position says consumers will not face UPI transaction charges. Any merchant communication or pricing change should follow the final NPCI and acquiring-bank instructions.
What remains unknown
- The exact post-Diwali implementation date.
- Which merchant categories will be covered.
- Which categories, if any, will be exempt.
- Whether the proposed 0.4% rate will remain unchanged.
- Whether the ₹300 cap and ₹2,000 threshold will be modified.
Because the date and final rules were not stated in the October 13 reports, merchants should rely on a subsequent NPCI announcement and formal instructions from their payment partners before changing invoices, QR signage, accounting rules or customer notices.
Why the policy matters at national scale
UPI handled 2,366 crore transactions worth ₹29.9 lakh crore in July 2026, according to an August 8 Ministry of Finance release. That volume explains why even a small change in merchant economics could affect retailers, service businesses and payment providers, while still having no direct fee effect on a customer’s ordinary P2P transfer.
What customers and shops should do now
Customers
- Continue using UPI under the existing terms.
- Keep the distinction between P2P and P2M payments in mind.
- For a merchant payment above ₹2,000, do not assume a fee is payable by you solely because MDR has been proposed.
- Check official NPCI or government updates after Diwali for the final date and rules.
Shops
- Do not budget the reported 0.4% rate as a confirmed cost until final instructions arrive.
- Ask your acquiring bank or payment provider how any approved MDR would appear in settlement statements.
- Wait for category and exemption details before changing prices or adding notices.
- Maintain records that separate P2P receipts, P2M receipts up to ₹2,000 and larger P2M transactions.
The Bottom Line
NPCI has delayed, rather than cancelled, the proposed MDR for selected P2M UPI payments. Customers are not being given a new UPI transaction fee, and P2P transfers remain free. Shops may eventually face a 0.4% charge on eligible P2M payments above ₹2,000, capped at ₹300 for ₹75,000-plus transactions, but the post-Diwali date and final eligibility rules are still pending.
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