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UPI Merchant Discount Rate Implementation Postponed Until After Diwali
- •The National Payments Corporation of India announced that the Merchant Discount Rate on select person-to-merchant UPI transactions will take effect immediately after Diwali.
- •The implementation date will be notified separately following a decision by the UPI and Services Steering Committee to protect the festive season.
- •A 0.4 percent MDR was previously scheduled for P2M UPI transactions above Rs 2,000 starting October 15, to be borne by merchants and capped at Rs 300 for transactions of Rs 75,000 or more.
- •Everyday merchant transactions and payments between individuals will continue to remain completely free.
- •The proposed fee aims to help fund essential UPI infrastructure, including system resilience, cybersecurity, fraud prevention, and customer support, amid annual operational costs of about Rs 20,000 crore.
Key Questions Answered
The National Payments Corporation of India announced that the Merchant Discount Rate on select person-to-merchant UPI transactions will be implemented immediately after Diwali, with the specific implementation date to be notified separately.
A 0.4% MDR applies to person-to-merchant UPI transactions exceeding Rs 2,000. This charge is borne by merchants and is capped at a maximum of Rs 300 for transactions amounting to Rs 75,000 or more.
The proposed fee helps fund the vital infrastructure required to operate UPI, including system resilience, cybersecurity, fraud prevention, and customer support. Industry estimates indicate that running UPI operations costs approximately Rs 20,000 crore annually, making government incentives alone an unsustainable long-term funding model.
