UPI MDR rollout may be pushed to January 2027 amid retailer pushback
The National Payments Corporation of India‑led UPI and Services Steering Committee is weighing a deferral of the merchant discount rate on select UPI transactions from October 15 to January 1, 2027, following opposition from retail trader groups. Under the proposed framework, a 0.40% fee would apply to person‑to‑merchant UPI payments above ₹2,000, capped at ₹300 per transaction, while businesses with up to ₹40 lakh annual turnover could be exempted and payments below the threshold would remain free of charge.
For bill payments, utilities, education and fuel, the fee would be a flat ₹5 on each transaction exceeding ₹2,000. Consumers would not bear the MDR, and the acquiring bank would retain 0.28% of the transaction value as interchange, passing 0.12% to the issuing bank and 0.08% to the UPI app provider. Authorities are also reviewing a raise in the daily UPI transaction limit for certain sectors from ₹1 lakh to ₹2 lakh. In September, UPI processed 24.07 billion transactions worth ₹29.37 trillion, with volume up 22.6% year‑on‑year and value up 18% year‑on‑year. The fee would create a new revenue stream for banks, payment service providers and third‑party application providers.
The MDR would end the current zero‑fee regime for most merchant UPI payments, a shift that the Centre said would leave about 96% of transactions unaffected. Retailer associations have opposed the fee, arguing it would raise costs for thin‑margin businesses and had called for a ‘No UPI Day’ on October 2 before withdrawing the protest after a meeting with Finance Minister Nirmala Sitharaman on September 30.
What we know
Deferral of MDR to January 1, 2027
0.40% MDR rate on UPI payments above ₹2,000 capped at ₹300
Exemption for businesses with up to ₹40 lakh annual turnover
Estimated annual cost impact of ₹7,000–₹9,000 crore
UPI processed 24.07 billion transactions worth ₹29.37 trillion in September