Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions will be implemented immediately after Diwali, according to the attached press release issued by the National Payments Corporation of India (NPCI). The exact implementation date will be notified separately.

The announcement follows a decision taken by the UPI and Services Steering Committee on October 13. The committee cited the festive season as the reason for scheduling implementation after Diwali.

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MDR is a fee associated with accepting merchant payments. The announcement concerns select UPI payments made to merchants, rather than announcing a charge across all UPI transactions.

The release does not specify the applicable MDR rate, the merchant categories covered, transaction-value thresholds or exemptions. These details will be necessary to determine which businesses and payments fall within the proposed framework.

The wording of the announcement is significant because it restricts implementation to “select” P2M transactions. It therefore does not establish that every merchant accepting UPI payments will be subject to MDR. Nor does the release announce a fee payable by customers making UPI payments.

For merchants, the immediate development is the timing of implementation. Businesses covered by the eventual framework will need to assess its effect on payment acceptance costs once the applicable terms and commencement date are communicated.

NPCI operates retail payment and settlement systems in India, including UPI. Its latest announcement sets out the post-Diwali implementation timeline, while leaving the precise date and operational details to further communication.

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