NPCI defers UPI MDR rollout until after Diwali, fintech stocks rebound

New Delhi: The National Payments Corporation of India (NPCI) on Tuesday deferred the implementation of Merchant Discount Rate (MDR) on select Unified Payments Interface (UPI) merchant transactions until after Diwali, providing temporary relief to merchants and consumers during the festive season.

In a statement, NPCI said that its UPI and Services Steering Committee had decided to postpone the rollout, keeping the festive season in mind.

The MDR framework was originally scheduled to come into effect from October 15.

“UPI and Services Steering Committee today decided that, keeping in mind the festive season, Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions shall be implemented immediately post Diwali at a date to be notified separately,” NPCI said.

The payments body added that the revised implementation date will be communicated separately.

The move also triggered a sharp recovery in fintech stocks which rebounded from their intra-day lows following the announcement.

Under the proposed MDR framework, select merchant categories including railways, telecom services, insurance and fuel purchases would attract a flat MDR of Rs 5 on UPI transactions exceeding Rs 2,000.

For payments made to large merchants above the same threshold, a charge of 0.4 per cent would be levied, subject to a maximum cap of Rs 300 per transaction.

NPCI has maintained that the revised MDR structure will have a limited impact on the broader UPI ecosystem.

According to estimates shared earlier, only around 4 per cent of merchant transactions are expected to fall under the ambit of the new framework, while over 95 per cent of person-to-merchant (P2M) UPI transactions will continue to remain exempt from MDR charges.

The framework also preserves the zero-MDR regime for small merchants operating under the person-to-person merchant (P2PM) model, ensuring that smaller businesses are not burdened with additional transaction costs.

The decision to defer the rollout comes amid heightened industry discussions around the reintroduction of MDR on certain categories of UPI transactions and its likely impact on merchant payments, fintech companies and the digital payments ecosystem.

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