Trader associations urge NPCI to defer UPI MDR rollout beyond festive season

Trader associations have urged NPCI to postpone the implementation of MDR charges on certain UPI merchant transactions from October 15, arguing that the move could affect businesses during the festive season. NPCI is yet to take a decision on the request.

New Delhi: Traders’ bodies have requested the National Payments Corporation of India (NPCI) to defer the rollout of recently announced merchant discount rates (MDR) on Unified Payments Interface (UPI) transactions scheduled for October 15, according to a report.

The report from NDTV Profit — citing sources — said trade associations proposed delaying the new charges until after the festive season or into early next year, citing concerns about the impact on merchants during a peak sales period. NPCI, which designed the revised MDR framework in consultation with stakeholders, has not yet taken a decision.

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Under the new rules, a flat levy of Rs 5 will apply to select merchant categories for UPI payments above Rs 2,000, while large merchant payments above Rs 2,000 will attract a fee of 0.4 per cent, capped at Rs 300, NPCI had said.

Capital‑market payments, such as mutual funds and securities transactions, will face a lower MDR of 0.02 per cent, also subject to a Rs 300 cap per transaction.

NPCI estimates the changes will affect only about 4 per cent of merchant transactions, leaving over 95 per cent of person‑to‑merchant UPI payments outside the MDR framework. Small merchants using peer‑to‑peer merchant models will continue to enjoy zero MDR.

No monthly quota or cap is imposed on free UPI usage for individual users, and they can continue to make UPI payments without an MDR charge on transactions within the applicable free framework.

The revised structure also creates a dedicated fund to promote UPI acceptance among small merchants, with 5 per cent of total MDR collections earmarked for the initiative. MDR revenue will be shared among players and is intended to support UPI expansion, cybersecurity and innovation. Banks have been advised to ensure merchants do not pass MDR charges on to customers.