Archive · 8 Oct 2026
UPI Merchant Discount Fee May Be Delayed Until January 2027
India is considering starting a new fee on some business UPI payments later than planned.
The fee was due to begin on October 15, but it may start on January 1, 2027; officials have not made a final decision.
It would apply to certain payments above ₹2,000 made to businesses.
The business, not the customer, would pay the fee.
Payments between people and some small payments would stay free.
A delay could give shops and payment companies more time to get ready, especially during the busy festive season.
Officials are also discussing whether more small businesses should be exempt and how the fee would be shared among payment firms and banks.
The Supreme Court has not stopped the plan, but it has asked authorities to respond to a legal challenge.
RBI Governor Sanjay Malhotra said he did not expect a small fee to greatly reduce UPI use.
The proposed 0.4% MDR on eligible person-to-merchant UPI payments above ₹2,000 may be delayed from October 15 to January 1, 2027; no final decision has been reported.
The charge is designed to be paid by merchants, not consumers; person-to-person payments and specified small-value payments are to remain free.
Sources say postponement could give merchants and payment firms more time to prepare systems and avoid introducing changes during the festive season.
NPCI’s UPI and Services Steering Committee is discussing implementation details; reports say it is considering a turnover-based small-business exemption, while payment aggregators are negotiating their fee share with sponsor banks.
The Supreme Court declined to stay the framework and issued notices on a challenge; RBI Governor Sanjay Malhotra said he did not expect a small charge to significantly affect UPI volumes.
- Who
- NPCI and the UPI payments ecosystem are involved; the proposed fee would apply to eligible merchants.
- What
- A proposed 0.4% merchant discount rate on eligible UPI merchant transactions may be deferred.
- When
- The proposed October 15 start may move to January 1, 2027; no final decision has been reported.
- Where
- India.
- Why
- Reportedly to give merchants and payment companies more time to prepare and avoid changes during the festive season.
Concerns and calls for more time
Reasons cited for proceeding
Timing and readiness
Concerns and calls for more time
A delay could give merchants and payment companies time to prepare and avoid changes during the festive season.
Reasons cited for proceeding
The proposed framework remains in place; reports describe a possible delay, not a cancellation, and no final timing decision has been reported.
Impact on UPI use
Concerns and calls for more time
Retail traders have objected to the fee, and a legal challenge has been filed against the framework.
Reasons cited for proceeding
RBI Governor Sanjay Malhotra said he did not expect a small charge to have a major impact and said no drop in volumes was then visible.
- Proposed rate
- 0.4% on eligible person-to-merchant UPI transactions above ₹2,000
- Proposed start
- October 15; a delay to January 1, 2027 is under consideration
- Decision status
- No final decision on the delay has been reported
- Who pays
- The MDR is a merchant-side charge, not a direct consumer fee
- Reported cap
- ₹300 for transactions of ₹75,000 or more
- Possible small-business exemption
- The committee is reportedly considering an exemption for businesses with annual turnover up to ₹40 lakh
- Legal status
- On September 28, the Supreme Court declined to stay the framework and issued notices on a challenge
- Payment aggregator discussions
- Reports say aggregators are negotiating to retain 50–80% of acquiring banks’ share
Sources
MDR rollout likely to be deferred to January 1
0.4% levy on UPI payments may kick in from January 1: Report
UPI MDR: Who decides ultimate implementation and enforcement of MDR caps? Any dedicated fund for small merchants?
Festive cheer: UPI MDR may be deferred till next year, says report
