UPI Fee Rollout Pushed to After Diwali Following Trader Appeals
The National Payments Corporation of India (NPCI) has postponed the rollout of a Merchant Discount Rate (MDR), a fee charged to merchants for processing digital transactions, on some UPI payments. Originally set for October 15, the new implementation date is now an unspecified time "immediately after Diwali". The planned 0.4% fee on person-to-merchant transactions over ₹2,000 was deferred after trader organisations appealed to the Prime Minister's Office, arguing it would burden businesses during the peak festive season.
What this means
This is a significant, if temporary, victory for millions of merchants who rely on the zero-cost UPI system, especially heading into their busiest sales period. The delay suggests the government is highly sensitive to pressure from this large and politically important group. For banks and payment companies, it means a further delay in generating revenue from the widely used but expensive-to-maintain UPI infrastructure. The critical question now is whether this postponement is simply a tactical pause or a precursor to a complete rethink of the UPI monetisation strategy, especially with the Supreme Court also examining the issue.
Most affected: Merchants and payment aggregators
Key takeaway: Banks and payment firms should not count on UPI MDR revenue this quarter and must watch for the government's final stance post-festivities.
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