The government has made an important decision regarding the Merchant Discount Rate (MDR) for UPI transactions, which were set to come into effect in two days. The commission will no longer be charged on certain transactions starting October 15th, and its introduction has been postponed until after the Diwali festival.
The central government had previously set the MDR rate at 0.40% for UPI transactions exceeding 2000 rupees, which was scheduled to begin on October 15th. Prior to this, the government had already announced significant support for certain transactions during the festive season.
Determination of New Date After Diwali
The UPI Services Management Committee has decided, considering the upcoming festive season, that the MDR for specific 'person-to-merchant' (P2M) transactions will be introduced after Diwali. Further details regarding the exact date of this commission's implementation will be communicated later.
This is good news for traders during the holidays, as Diwali, Dussehra, Navratri, and other festivals are periods of peak market activity. The Confederation of Trade and Industry (CTI) had previously urged a postponement of this decision, citing potential serious damage to trade.
Thus, the UPI Services Management Committee of the National Payments Corporation of India (NPCI) has decided to delay the application of MDR for selected merchants until after Diwali, providing relief to traders across the country, including Delhi.
Conditions for Applying MDR
Previously, a document was published on September 14, 2026, within the UPI MDR framework, and in subsequent days, NPCI released a full circular defining the new MDR structure for UPI payments. According to the established structure, the MDR is set at zero for transactions under 2000 rupees, while an MDR of 0.4% applies to UPI payments above this threshold for person-to-merchant transactions.
The government's circular also clarified that different charges will apply to transactions in the range of 5 to 300 rupees depending on the category.
The government provided MDR concessions not only for specific sectors but also for small entrepreneurs. Specifically, sellers who receive up to 100,000 rupees monthly via their shop's QR code have been included in the zero MDR category.
Fixed MDR Rate Model
Furthermore, according to the circular issued by NPCI, five categories of UPI payments have been included in the Fixed MDR Rate Model. This means that a uniform fee will be applied regardless of the payment amount. The government has set a preferential rate of 5 rupees per transaction. Consequently, even if a UPI payment exceeds 2000 rupees, 10,000 rupees, or more, the MDR will only be 5 rupees.
These categories include payments at petrol pumps, UPI railway transactions, insurance premium payments via UPI, telecommunication service payments, and utility payments such as water and electricity.