India may defer UPI merchant fees until January, expand small trader relief

India's push to introduce merchant discount rates (MDR) on Unified Payments Interface transactions may be deferred until January 1, providing a festival season reprieve for traders and digital payment processors, according to informed sources.

The delay would allow stakeholders more time to prepare for the new fee structure, which has been a contentious issue in India's fintech ecosystem. The move comes as the payment industry has sought additional time to adapt to the regulatory changes.

Alongside the deferment, authorities are reportedly examining an expansion of fee exemptions currently available to small merchants. The exemption bracket could be broadened to include businesses with annual turnover of up to ₹40 lakh, significantly widening the pool of traders who would remain unaffected by UPI merchant charges.

This expanded relief threshold would benefit a larger segment of India's retail and small business community, many of whom have migrated to digital payment systems in recent years. The proposal reflects growing recognition of the pricing sensitivity among small traders who depend on UPI for daily transactions.

Final decisions on both the deferment timeline and exemption thresholds are expected following consultations between the government, the Reserve Bank of India, and industry representatives.