UPI Charge: Big news for UPI users. The National Payments Corporation of India (NPCI) has delayed the implementation of the Merchant Discount Rate (MDR) charge on specific UPI payments until after Diwali. This decision was taken during the UPI Steering Committee meeting on October 13th.
The original date for the rule to come into effect was October 15th, 2026. NPCI will announce the revised date separately. However, this delay does not mean the charge has been eliminated entirely. The decision to enforce MDR charges on UPI payments has been postponed until post-Diwali. The timing for the new charge to be introduced remains uncertain at this point.
Know the Key Points:
1. Application of the New Charge:
The MDR charge on UPI transactions will be put into effect immediately following Diwali, although a specific date is yet to be disclosed by NPCI. Some sources have mentioned a probable rollout in the second week of November, but this has not been officially confirmed.
2. Payment for UPI Transactions:
Regular customers will not be required to pay a separate fee for each UPI transaction. Sending money between individuals will continue to be free, irrespective of the amount. Additionally, merchants will not incur MDR charges for UPI payments up to Rs 2,000. Small shopkeepers receiving UPI payments up to Rs 1 lakh per month via QR code will also be exempt from this charge, as per existing regulations.
3. Impact on UPI Payments:
The government estimates that about 96% of merchant UPI transactions will not be affected by the new regulations. This indicates that daily purchases and small transactions will proceed as usual. It has been clarified that merchants cannot pass on MDR charges to customers as a separate UPI fee. However, the impact of the new rules on merchants will vary based on their payment category and relevant charges.
4. Reason for Introducing MDR Charges:
MDR charges were waived for several years to encourage digital payments through UPI. However, with the substantial rise in UPI transactions, banks and payment firms are now facing the operational costs of maintaining the system. Consequently, the decision was made to introduce charges on selected merchant payments. Although the new MDR structure was announced in September, its implementation was postponed due to the festive period.
5. Implications for Merchants and Customers:
There are currently no significant alterations planned for everyday UPI transactions for regular customers. Merchants will need to ascertain if the new charges apply to their specific categories. NPCI has only delayed the decision, not revoked it. The focus is now on the official announcement post-Diwali, which will provide clarity on when and which payments will be subject to the new MDR charges.