UPI merchant charges likely deferred to January 2027

The government and the National Payments Corporation of India (NPCI) are actively considering deferring the proposed 0.4% Merchant Discount Rate (MDR) charge on UPI transactions above Rs 2,000. The charge was to take effect from 15 October but is now likely to be postponed to 1 January 2027. No official final order has been issued yet.

Reasons for the potential delay include concerns raised by trader organisations that the festival season from October to December would see high-value transactions, and that the charge would impact merchant profits and consumer buying behaviour. Payment apps and banks have also sought more time to update their systems.

The MDR charge applies only to merchants, not to regular consumers using UPI. Peer-to-peer transactions between individuals remain free of any charge. The government has clarified that merchants cannot pass the fee on to customers.