Could UPI MDR Implementation Be Delayed?

The new Merchant Discount Rate (MDR) framework for select UPI merchant transactions is set to take effect from October 15. Reports claiming that the implementation could be postponed to January 1, 2027 have gone viral, but there is no final official confirmation of such a postponement so far. Under the new framework, all person-to-person (P2P) UPI transactions will remain completely free, while merchant payments up to ₹2,000 will also attract zero MDR. Small merchants receiving up to ₹1 lakh per month through UPI QR codes will continue to be covered under the zero-MDR framework.

For specified person-to-merchant transactions above ₹2,000, an MDR of 0.4% will apply, with a maximum cap of ₹300 per transaction for payments of ₹75,000 and above. Transactions above ₹2,000 in essential sectors such as railways, telecom, insurance, fuel and agricultural inputs will attract a flat MDR of ₹5, while capital market transactions will carry an MDR of 0.02%, capped at ₹300. The government has clarified that MDR is not a charge collected from customers and is distributed among participants in the payment ecosystem, including banks and payment service providers. Around 96% of merchant transactions are expected to remain unaffected.