World · India Bureau
India delays UPI MDR implementation decision until after Diwali
The National Payments Corporation of India has postponed a decision on imposing Merchant Discount Rates on UPI transactions to avoid payment disruptions during the festive season. Business groups and payment companies had raised concerns about implementing the fee structure during peak holiday shopping.
LSN India ·
The National Payments Corporation of India (NPCI) has deferred its decision on implementing Merchant Discount Rates (MDR) on Unified Payments Interface transactions until after Diwali, citing operational concerns during the festive period.
Business associations and payment service providers had expressed apprehension that introducing MDR charges during the festival season could create payment friction and disrupt commercial activities when transaction volumes are typically highest. The concerns centered on potential customer resistance and technical challenges that could arise from suddenly imposing fees on merchants during peak buying season.
Taking these factors into consideration, the NPCI decided to extend the timeline for finalizing the MDR policy implementation. The decision reflects an effort to balance the central bank's regulatory objectives with the practical realities of the financial services industry during high-volume transaction periods.
The postponement provides stakeholders additional time to prepare for the transition and allows for further consultations with industry participants. Payment companies and merchants have long sought clarity on UPI fee structures, with the MDR implementation considered a significant policy development for India's digital payments ecosystem.