The UPI MDR (merchant discount rate) on select person-to-merchant payments, due to start on October 15, will now apply from a date immediately after Diwali, the National Payments Corporation of India (NPCI) said on October 13 after a decision by its UPI and Services Steering Committee. The framework NPCI issued on September 15 sets a 0.4% fee on merchant payments above ₹2,000, capped at ₹300, and a flat ₹5 for categories such as rail tickets, fuel and utility bills, while person-to-person transfers and payments of ₹2,000 or less stay free.
Why it matters: Payments above ₹2,000 are about 4% of person-to-merchant UPI volume but around two-thirds of its value, according to The Indian Express, so the fee would give banks and payment apps income on ordinary bank-account UPI payments, which have carried no MDR since January 2020. The Supreme Court has asked NPCI, the RBI and the government to explain the legal basis for the charge, with a hearing set for November 2, so the start date could move again.
Source: NPCI press release, October 13, 2026; The Indian Express, October 13, 2026; The Hindu BusinessLine, October 16, 2026
Image: TG09Z, CC BY-SA 4.0, via Wikimedia Commons
