The National Payments Corporation of India (NPCI) has announced that the implementation of the Merchant Discount Rate (MDR) on select person-to-merchant (P2M) Unified Payments Interface (UPI) transactions will now take effect immediately after Diwali.
The decision was taken on Tuesday by the UPI and Services Steering Committee, keeping in view the high-volume festive shopping season. The exact implementation date will be notified separately.
The new MDR framework follows parliamentary amendments to Section 10A of the Payment and Settlement Systems Act, 2007, under the Taxation and Other Laws (Amendment) Bill, 2026. Under the revised rules, two fee structures will apply to merchant transactions exceeding Rs 2,000:
- 0.4% MDR: Applies to select P2M UPI payments above Rs 2,000, capped at Rs 300 per transaction.
- Flat ₹5 Fee: Applies to transactions above Rs 2,000 across four specific merchant categories—railways, telecom, insurance, and fuel.
Person-to-person (P2P) transfers remain fully exempt.
