The merchant discount rate (MDR) on UPI payments will not begin on October 15, 2026. The National Payments Corporation of India (NPCI) announced on Tuesday, October 13, 2026, that the charge on select person-to-merchant (P2M) UPI transactions has been deferred until after Diwali. No new starting date has been given.
According to the NPCI statement quoted by PTI, the charge "shall be implemented immediately post Diwali on a date to be notified separately". News On AIR reported that the decision was taken by the UPI and Services Steering Committee, which took the festive season into account.
What was due to start on October 15
The charge comes from an NPCI circular dated September 15, 2026. As reported by PTI, the plan is as follows:
| Type of UPI payment | Planned charge |
|---|---|
| Person-to-person transfers | Free |
| Payments to merchants up to Rs 2,000 | Free |
| Payments to merchants above Rs 2,000 | 0.4%, capped at Rs 300 for payments of Rs 75,000 or more |
| Railways, telecom, fuel, insurance (above Rs 2,000) | Flat Rs 5 per transaction |
| Mutual funds and stockbroking | 0.02%, capped at Rs 300 |
The deferral changes only the starting date. Neither report says that the rates or the Rs 2,000 limit have been revised.
Who pays the charge
MDR is paid by the merchant who receives the money, not by the customer who scans the QR code. PTI reported that the amount collected is to be shared among the customer's bank (40%), payment gateways (30%), the UPI app (20%) and the app's sponsoring bank (10%).
NPCI has described the charge as a way of "creating a sustainable revenue framework for the digital payments ecosystem", PTI reported.
Why it was put off
The announcement came two days before the charge was to take effect. PTI reported that a delegation of about 20 trade leaders met Finance Minister Nirmala Sitharaman on September 30, 2026 and raised concerns about it. The same report said Opposition parties had called the levy a tax that would burden consumers.
The Confederation of All India Traders (CAIT) called the deferral "timely and pragmatic", PTI reported. The traders' body said: "Additional transaction costs could have placed an avoidable burden on merchants operating on thin margins."
What it means for you
- Customers: nothing changes for now. Sending money to another person and paying a shop by UPI remain free, as before.
- Shops and businesses: UPI payments above Rs 2,000 will not attract the 0.4% charge through the Diwali season.
- After Diwali: the charge is still planned. It starts only when NPCI notifies a date.
UPI handled 24.07 billion payments in September 2026. Our earlier report on the September UPI numbers and the planned 0.4% merchant charge explains the background.
What happens next
NPCI has to notify the new date. Until that notice is issued, the charge set out in the September 15 circular does not apply.
