Business & Economy
NPCI delays UPI merchant fee until after Diwali
UPI’s free merchant model survives, but funding remains unresolved
UPI’s free merchant model survives, but funding remains unresolved
Merchants will get a temporary reprieve from a proposed fee on some larger payments during Diwali, when sales are especially important. had planned a 0.4% charge on selected payments to businesses above ₹2,000, paid by merchants rather than customers. Person-to-person transfers would remain free. The fee would be capped at ₹300 for payments of ₹75,000 or more, with the money shared among banks, payment apps and .
moved the start date from October 15 to immediately after Diwali after merchants warned that a new cost could disrupt festive shopping and influence how people pay. The delay does not cancel the plan or settle who will ultimately bear the cost. Banks and payment companies want income from a system that has largely offered free merchant payments, while businesses fear thinner margins or pressure to pass costs to customers. The decision leaves ’s long-term funding model unresolved.
The postponement did not cancel the 0.4% proposal, the ₹300 cap, or the planned distribution among the customer’s bank, gateway, UPI app, and sponsoring bank. Banks, payment apps, and infrastructure providers continue to seek a after years of largely free merchant payments. The next implementation date will determine whether the proposal becomes a lasting for UPI.
NPCI’s deferred the MDR on selected person-to-merchant UPI transactions, citing the festive season. The fee was moved to immediately after Diwali, while the specific replacement date was left to a separate notification. The decision temporarily preserved the existing merchant-payment cost environment during the festival.
Merchant bodies, fintech companies, and payment firms reportedly requested delaying the proposed MDR on select UPI transactions, citing concerns about costs and payment activity during the . NPCI subsequently deferred implementation until after Diwali.[1][3][8]
October 15 was set as the original implementation date for the selected person-to-merchant transactions. Banks, , UPI apps, gateways, and merchants were expected to prepare operational changes for the new fee. Person-to-person UPI payments were excluded from the proposal and would remain free.
The proposed MDR would be capped at ₹300 for transactions of ₹75,000 and above. Reports described a distribution of the fee among the customer’s bank, , UPI app, and , with respective shares of 40%, 30%, 20%, and 10%. The structure sought to create revenue for the banks, apps, and payment infrastructure supporting UPI.
approved a 0.4% on selected above ₹2,000. The charge applies to merchant payments, not person-to-person transfers between individuals, and merchants would formally pay it rather than consumers. The framework was scheduled to begin on October 15, 2026.