NPCI delays merchant discount rate rollout until post-Diwali period

The National Payments Corporation of India (NPCI) has pushed back the implementation of a merchant discount rate (MDR) on UPI payments, moving the rollout timeline beyond the Diwali festival period. The delay provides merchants and payment service providers with an extended window to prepare for the new charging structure.

Under the framework outlined in NPCI's recent circular, a 0.4 percent MDR would be levied on select person-to-merchant (P2M) transactions exceeding ₹2,000. The postponement reflects NPCI's consideration of the peak retail season and potential operational challenges that merchants might face during heightened transaction volumes around Diwali.

The MDR implementation has emerged as a focal point in ongoing discussions between payment industry stakeholders and regulators regarding the monetization of UPI services. While NPCI has clarified that MDR charges would apply selectively to high-value transactions, the postponement suggests the regulator is taking a measured approach to implementation.

The deferral follows broader industry consultations and reflects efforts to balance the need for sustainable payment infrastructure with the operational realities facing merchants. Further details regarding the revised implementation timeline are expected to be communicated through official NPCI channels.

The postponement underscores the complexity of rolling out new fee structures in India's digital payments ecosystem, where UPI has achieved significant market penetration and handles transactions across diverse merchant segments.