NPCI considering delay for UPI merchant discount rate rollout
Merchant bodies and fintechs have asked the National Payments Corporation of India (NPCI) to postpone the rollout of UPI's Merchant Discount Rate (MDR) until January 2027. A decision is expected soon.
India's National Payments Corporation (NPCI) is considering a delay in the implementation of the Merchant Discount Rate (MDR) for UPI transactions. Multiple merchant associations and fintech companies have requested the rollout be postponed to January 2027, seeking more time to resolve complexities surrounding the new charges.
The MDR was originally scheduled to take effect on October 15, 2026. Merchants and their representative bodies have voiced concerns that the new fees could significantly increase operational costs, particularly for small businesses. There is a fear that this may incentivize a return to cash transactions, especially leading into the festive season when inflation already strains consumers and businesses.
The NPCI is reportedly in discussions with the finance ministry regarding the request, with a decision anticipated shortly. The UPI MDR is set at 0.4% for transactions exceeding 2,000 rupees (approximately $24). However, the rate is differentiated across various payment categories, with certain sectors like utility payments and loan repayments subject to flat fees.
Payment companies have generally supported the introduction of MDR, citing the need for the payments ecosystem's financial sustainability. They argue that the industry has absorbed UPI processing costs for years without dedicated revenue streams. The MDR is intended to fund investments in cybersecurity, fraud prevention, and infrastructure, while smaller transactions and peer-to-peer transfers will remain free.