By Shishir Prashant 
PrashantNews
The National Payments Corporation of India (NPCI) has postponed the implementation of Merchant Discount Rate (MDR) charges on select Unified Payments Interface (UPI) merchant transactions until after Diwali, providing temporary relief to businesses during the festive shopping season.
The charges were scheduled to come into effect from October 15. In a statement issued on Tuesday, NPCI said its UPI and Services Steering Committee had decided to implement the MDR on select person-to-merchant (P2M) transactions immediately after Diwali, with the revised date to be announced separately.
Under the proposed framework, a 0.4 per cent MDR will apply to eligible merchant transactions exceeding ₹2,000, subject to specified exemptions and a maximum charge of ₹300 per transaction for payments of ₹75,000 and above. Certain categories, including railways, telecommunications, insurance and fuel, are covered by a separate flat-fee structure under the announced framework.
MDR is a fee paid within the payment-processing ecosystem to banks and other service providers for processing merchant transactions. The proposed charges do not apply to person-to-person transfers, such as sending money to friends or family. Merchant payments up to ₹2,000 and transactions covered by the zero-MDR framework for eligible small merchants will also remain exempt.
According to the Union Finance Ministry, approximately 96 per cent of merchant UPI transactions are expected to remain unaffected by the framework.
The postponement comes during the busy festive shopping period, when digital payments typically see increased use. Merchant associations had raised concerns about introducing additional transaction costs during the season.
The latest decision changes the implementation timeline, but does not amount to cancellation of the proposed MDR framework. Merchants and payment service providers will have to await NPCI’s announcement of the revised date and operational details.
