UPI MDR Rollout May Shift to January 2027, with the proposed merchant discount rate on certain UPI payments above Rs 2,000 potentially being deferred from October 15, according to reports.
The proposal is aimed at giving merchants and the wider digital payments ecosystem more time to prepare, particularly during the festive shopping season.
A final decision on the proposed delay has not yet been announced.
UPI MDR Rollout May Shift to January 2027
Under the new framework, a 0.4% MDR would apply to specified person-to-merchant UPI transactions above Rs 2,000.
The charge is part of the payment ecosystem and is not intended to be directly collected from customers.
The proposed rollout had been scheduled for October 15.
Reports now indicate that it could be postponed until January 1, 2027, allowing businesses and payment companies to adjust to the new framework after the festive period.
What Happens to Rs 2,000 UPI Payments
UPI merchant payments of up to Rs 2,000 will continue to remain free of MDR under the announced framework.
Person-to-person UPI transactions will also remain free, regardless of the amount transferred.
The government has said that approximately 96% of person-to-merchant UPI transactions will remain unaffected.
Small merchants covered under the zero-MDR framework will also continue to receive protection from the charge.
For specified merchant transactions above Rs 2,000, the MDR would generally be 0.4%.
Transactions of Rs 75,000 and above would have an MDR cap of Rs 300 per transaction under the framework.
Why UPI MDR Rollout Could Be Delayed
Merchant organisations, fintech companies and payment firms have reportedly sought more time, citing concerns over different MDR rates, their applicability to various transactions and operational readiness.
A delay would keep the proposed merchant charge from taking effect during the festive shopping period, when UPI usage and consumer spending typically increase.
The proposal is therefore being viewed as a temporary breather for merchants and other participants in the digital payments ecosystem.
However, the January 2027 date remains a proposal at this stage.
Until a final decision is announced, the previously proposed October 15 implementation date remains the reference point for the new MDR framework.
Customers making regular UPI payments should also note that MDR is a merchant-side charge under the framework.
It does not mean that consumers will automatically be charged a fee for making UPI payments above Rs 2,000.
