Update: UPI Merchant Fee Deferred Until After Diwali, NPCI Says, With No New Date Yet

The story so far

A 15 September NPCI circular proposed a 0.4 per cent Merchant Discount Rate (MDR) on select person-to-merchant (P2M) UPI payments above Rs 2,000, starting 15 October. JammuBeat's earlier explainer, No, UPI Isn't About to Start Charging You, set out what was and was not changing. The fee is paid by merchants, not by the person paying.

What's new

On Tuesday 13 October, NPCI said the UPI and Services Steering Committee had decided, "keeping in mind the festive season", that the MDR will be implemented "immediately post Diwali on a date to be notified separately". Note the headline of the PTI report says no new date has been announced, while the body says the date will be decided after Diwali, so treat the start date as open.

What stays the same

• The charge was to be capped at Rs 300 for transactions of Rs 75,000 or more.
• Payments between individuals, and the vast majority of everyday merchant payments, were to remain free under the circular.
• Essential services such as railways, telecom, fuel and insurance were to attract a flat Rs 5 per transaction above Rs 2,000; capital-market payments, 0.02 per cent, also capped at Rs 300.
• Of the MDR collected, 40 per cent goes to customers' banks, 30 per cent to payment gateways, 20 per cent to the UPI app and 10 per cent to the app's sponsor bank.

The two positions, in their own words

NPCI says it is creating a sustainable revenue framework for the digital payments ecosystem. The Opposition, as reported by PTI, termed the levy a tax that would burden consumers. The Confederation of All India Traders called the deferral "timely and pragmatic" for traders and MSMEs in the festive and wedding season, following a 30 September meeting of about 20 trade leaders with the Finance Minister.

What to do: if you run a small shop, stall or freelance business in Jammu and accept UPI above Rs 2,000, nothing changes today. Watch for the NPCI notification after Diwali.

Photo: file image. Source: Greater Kashmir / PTI, 14 October 2026.