Published Oct 13, 2026 | 6:06 PM ⚊ Updated Oct 13, 2026 | 6:06 PM
The UPI logo. (Supplied)
Synopsis: The NPCI announcement specifies that the proposed implementation will apply to select P2M UPI transactions. However, it does not specify in the statement which merchant categories or transaction types will be covered, the applicable rates, or who will bear the cost.
NCPI on Tuesday, 13 October, announced that the UPI Merchant Discount Rate (MDR) on select merchant transactions shall be implemented post Deepavali, instead of from 15 October as notified earlier.
The Merchant Discount Rate is a processing fee paid by merchants to banks or payment service providers for accepting digital payments.
The press release read: “UPI and Services Steering Committee today decided that, keeping in mind the festive season, Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions, shall be implemented immediately post Diwali at a date to be notified separately. ”
UPI MDR on Select Merchant Transactions Shall be Implemented Post Diwali
Press Release Link: https://t.co/5KMjOP0tHd https://t.co/pD8IKfN6sR
— NPCI (@NPCI_NPCI) October 13, 2026
The NPCI announcement specifies that the proposed implementation will apply to select P2M UPI transactions. However, it does not specify in the statement which merchant categories or transaction types will be covered, the applicable rates, or who will bear the cost.
Also Read: Centre imposes 0.4% MDR on UPI payments above ₹2,000 to merchants
Earlier, the Union government on 15 September, confirmed that UPI payments to merchants above ₹2,000 will attract a MDR from 15 October, under the Payment and Settlement Systems Act, 2007, following detailed deliberations by the UPI Steering Committee.
A nominal MDR of 0.4 percent will apply to person-to-merchant (P2M) transactions above ₹2,000, with a cap of ₹300 for transactions exceeding ₹75,000.
A ₹5,000 transaction would potentially attract an MDR of ₹20, a ₹10,000 transaction ₹40, a ₹25,000 transaction ₹100, and a ₹50,000 transaction ₹200. MDR is typically borne by the receiver of the payment.
Also Read: As UPI gets ready for its first charges, the real revolution is not the transaction count
While, hotels and restaurants across Keralam were set to stop accepting UPI payments exceeding ₹2,000, on 15 October, following the announcement, they have postponed it to post- Deepavali.
The Kerala Hotel and Restaurant Association (KHRA) announced that the move was in protest against the proposed merchant transaction fee.
KHRA said customers would have to pay in cash for bills above ₹2,000 once the restriction comes into effect.
Speaking to South First, KHRA president G Jayapal, said the decision to stop accepting payments above ₹2,000 has been postponed in view of the new development. However, he stressed that the concerns raised earlier still stand, and that the non-acceptance will be put into effect after Deepavali.
Another member, meanwhile, raised concerns over the lack of clarity around the phrase “select Person-to-Merchant (P2M) UPI transactions.” He demanded that the authorities concerned clarify what “select” means in this context.
The KHRA said the introduction of a 0.4 percent Merchant Discount Rate (MDR) on eligible UPI transactions would add to the financial strain on businesses already struggling with rising raw material prices and operating costs.
The association argued that charging merchants for digital transactions would discourage the adoption of cashless payments. Hotels and restaurants had been encouraged to embrace digital payment systems, but the proposed levy would now increase their expenses, the association pointed out.
With food prices and other input costs continuing to rise, the hospitality sector was already facing a difficult financial situation.
The additional charge could further aggravate the crisis faced by small establishments, it said.
KHRA has demanded that the proposed fee be withdrawn.
Alternatively, it has urged the authorities to raise the threshold for levying the charge to transactions exceeding ₹10,000, instead of ₹2,000.
(Edited by Sumavarsha, with inputs from Dileep V Kumar)
