On 13 October 2026, two days before it was due to start, the National Payments Corporation of India deferred the merchant discount rate (MDR) on select person-to-merchant UPI payments. NPCI’s UPI and Services Steering Committee said the charge “shall be implemented immediately post Diwali at a date to be notified separately”, Business Standard reported. The fee structure itself is unchanged.
What changes
Only the start date has moved. The framework NPCI set out in September still stands, as reported by ANI via The Tribune:
- An MDR of 0.4% on merchant payments above ₹2,000, capped at ₹300 a transaction, a cap reached at ₹75,000.
- A flat ₹5 a transaction above ₹2,000 in specified sectors, including railways, telecom, insurance and fuel.
- No MDR on payments up to ₹2,000, on person-to-person transfers, or for small merchants collecting up to ₹1 lakh a month through existing QR codes.
The Finance Ministry has said about 96% of merchant transactions will be unaffected. Business Today notes that 18% GST applies to the MDR fee itself, not the payment, and that registered merchants can usually claim input tax credit on it.
What it means for founders
For Indian D2C brands, SaaS firms and service businesses with average order values above ₹2,000, UPI stops being free once the new date arrives. On a ₹10,000 order the fee is ₹40 plus GST. That narrows the cost gap between UPI and cards for higher tickets, and changes the sums on cash-on-delivery versus prepaid nudges. The extra weeks are time to prepare, not a cancellation.
What to do now
- Pull your UPI transactions above ₹2,000 for the last three months and estimate the monthly fee at 0.4%.
- Ask your payment gateway how it will pass on the MDR and the GST on it, and how it will show on settlement reports.
- Review pricing and checkout offers for high-value orders before the new date is notified.
- If you run a recurring billing product, check how the charge applies to your collection flows and update your SaaS billing logic if needed.
Sources: Business Standard, UPI MDR deferred until after Diwali; The Tribune (ANI), NPCI defers MDR on select UPI merchant transactions; Business Today, NPCI says small merchants and 96% of transactions unaffected