New Delhi: The government has granted UPI users a brief reprieve from charges. It has deferred the implementation of the Merchant Discount Rate (MDR) on UPI transactions originally scheduled for October 15 for select transactions. This means no MDR will be applicable during the festive season. The central government had previously set an MDR of 0.40% on UPI transactions exceeding ₹2,000, with implementation slated for October 15, 2026. However, a decision has now been made to postpone the implementation date until after Diwali.
Will the new date be set after Diwali?
On Tuesday, the UPI and Services Steering Committee made a significant decision: considering the festive season, the implementation of MDR on select person-to-merchant UPI transactions will be deferred until after Diwali. The specific date for implementation will be announced separately at a later time.
The future date has not yet been finalised. Nevertheless, this is major news for merchants, as festivals like Diwali, Dussehra, and Navratri represent the biggest business opportunities of the year. The Chamber of Trade and Industry (CTI) had also been consistently demanding a deferral, citing the potential adverse impact on trade.
Good news has now arrived for merchants across the country, including those in Delhi. The UPI and Services Steering Committee of the National Payments Corporation of India (NPCI) has decided to postpone the implementation of the MDR on select merchant transactions until after Diwali.
Find out where and how much MDR was supposed to be applied
For context, a notification regarding the UPI MDR framework was issued on September 14, 2026, followed by a comprehensive circular from the National Payments Corporation of India the very next day. Under the framework established by the government for UPI payments, the MDR has been set to zero for transactions below ₹2,000, effective October 15, 2026.
For UPI payments exceeding this amount, a ‘Person-to-Merchant’ MDR of 0.4% has been implemented. Additionally, the government’s circular clarifies that flat charges ranging from ₹5 to ₹300 will apply to transactions across various categories.
Furthermore, the government has provided relief from UPI MDR charges to small merchants and specific sectors. Shopkeepers who receive payments of up to ₹1 lakh per month via QR codes at their outlets have also been included in the ‘Zero MDR’ category. It is worth noting that most young people in the modern era prefer using UPI. The habit of carrying cash is gradually disappearing; people use UPI everywhere, from tea stalls to showrooms.
