NPCI UPI MDR: 0.4% deferred to after Diwali

Update, 19 October 2026. This has been deferred. NPCI's UPI and Services Steering Committee postponed the rollout on 13 October 2026, two days before it was due, and said the MDR on select person to merchant transactions will be implemented post-Diwali on a date to be notified separately. Diwali is 8 November 2026. Reported by Entrackr, Inc42 and the Free Press Journal. The rate, the Rs 2,000 threshold and the Rs 300 cap are unchanged. Only the start date moved, and no new date has been announced. Earlier reporting pointed to 1 January 2027 and Inc42 states that the deferral does not confirm that date. The paragraphs below are the framework as reported on 17 September and are left as written, except that the commencement date they carried is no longer in force.

NPCI has set a merchant discount rate on UPI. Entrackr reported the framework on 15 September: 0.4 percent on select Person-to-Merchant transactions above Rs 2,000, a fee capped at Rs 300 per transaction for amounts of Rs 75,000 and higher, and a commencement date of 15 October 2026, since deferred. The report does not cite a circular number or a notification reference, so this is NPCI’s framework as reported, not a numbered instrument you can quote at a gateway.

Transactions up to Rs 2,000 continue at zero MDR. Consumers continue to pay nothing; the charge sits with the merchant. Small vendors under the Person-to-Person Merchant framework remain exempt, which Entrackr describes as covering small merchants receiving up to Rs 1 lakh a month through UPI QR codes. Railways, telecom, insurance and fuel are treated separately, at a flat Rs 5 per transaction.

Run the arithmetic on your own order file, because the shape of it matters more than the headline rate. The source gives two worked examples: a Rs 3,000 transaction attracts Rs 12, and a Rs 50,000 transaction attracts Rs 200. Both are 0.4 percent of the full value, not of the excess above Rs 2,000. The cap binds from Rs 75,000, where 0.4 percent is exactly Rs 300, so a Rs 1 lakh transaction costs Rs 300 rather than Rs 400 and the effective rate keeps falling from there.

For most consumer brands the cap is irrelevant and the threshold is everything. The cost is decided by what share of prepaid UPI orders clears Rs 2,000. A brand with baskets around Rs 800 sees no change at all. A brand at Rs 2,500 pays on every order and pays on the whole order. The band just above the threshold is where this lands hardest, because the fee arrives in full the moment a basket crosses it.

Three things to settle before the new date, whenever NPCI notifies it. Split the last ninety days of UPI settlements either side of Rs 2,000 so you hold a rupee number rather than a rate. Ask your acquirer in writing what it will pass through and from when, since your contract is with the acquirer and not with NPCI. And ask whether GST applies on top of the fee, because the report does not say.