NPCI Postpones UPI Merchant Fee Above ₹2,000 to After Diwali, With No Date Set

On 13 October 2026, the National Payments Corporation of India (NPCI) postponed the merchant discount rate (MDR) on select person-to-merchant (P2M) UPI payments above ₹2,000. The fee was due to start on 15 October. NPCI's UPI and Services Steering Committee said it would now be implemented "immediately post Diwali at a date to be notified separately." Diwali falls on 8 November. No new date has been announced as of 17 October.

For shoppers, nothing changes at checkout for now. The 0.4% charge is not in force, and the reports reviewed do not describe any new date.

What was planned

The fee was announced on 15 September. As reported, it applies at 0.4% to UPI payments above ₹2,000 at medium and large merchants. Payments up to ₹2,000 are exempt. Small merchants that receive less than ₹1 lakh a month through UPI are also exempt, according to TechCrunch. The fee is capped at ₹300 per transaction. A ₹75,000 payment reaches that cap, since 0.4% of ₹75,000 is ₹300. The Hindu reports that capital-market and strategic-sector transactions face different rates. The reports reviewed do not give those rates.

Who pays

• Merchants pay the fee. The Hindu and TechCrunch describe it as a charge on merchant establishments and merchant transactions.
• Person-to-person transfers are outside it. The announced measure covers P2M payments only. None of the reports reviewed describes a charge on transfers between individuals.
• Shoppers are not described as paying it directly. The reports do not say whether a merchant may add the fee to a customer's bill. That point is unresolved.
• The money is meant to fund UPI. NPCI said the amounts collected would be shared among UPI ecosystem participants to pay for infrastructure, cybersecurity and fraud prevention. TechCrunch, citing industry estimates, puts UPI's annual running cost at about ₹20,000 crore.

As an example, a ₹5,000 payment at a medium merchant would carry a merchant-side fee of ₹20 at 0.4%. The reports say the fee applies to transactions "exceeding" ₹2,000. They do not say whether it is charged on the full amount or only on the part above ₹2,000.

Why the date moved

Trade bodies asked the government to delay the rollout because it would affect festive-season sales. The Hindu reports, citing government sources, that the Prime Minister's Office took the decision after traders' appeals. The Confederation of All India Traders welcomed the decision. Before the postponement, the fee had drawn criticism from industry figures, including Zerodha founder Nithin Kamath, and from opposition politicians, according to BusinessLine.

The court challenge

A writ petition by Supreme Court advocate Anjan Datta sought a stay on the rollout, arguing that the process lacked transparency and raised constitutional concerns. The Supreme Court declined to stay it. Instead, it asked NPCI, the Reserve Bank of India and the Government of India to explain the legal basis for the charge. In a brief affidavit, the government said the charge was neither a tax nor a fee, according to BusinessLine.

The reports differ on the filing deadline. BusinessLine says the respondents have four weeks to reply. The Hindu says affidavits are due by late October. The matter is listed for hearing on 2 November, less than a week before Diwali. None of the reports reviewed says that the hearing will affect the post-Diwali start date.

What remains open

• The start date. NPCI has not named one.
• The fee base. It is not clear from the reports whether the 0.4% applies to the full amount or only the excess above ₹2,000.
• Pass-through. The reports do not say whether merchants can pass the fee on to customers.
• The primary document. This article relies on the NPCI statement as quoted in news reports. The statement and any circular were not reviewed directly.

BlinkMoney's UPI MDR calculator, listed in the sources below, shows how the 0.4% rule and the ₹300 cap apply at different payment amounts. Readers can use it to check a payment, but the fee is not currently in force, and the exact start date is still open.

Sources and links

• The Hindu: NPCI postpones MDR on select P2M UPI transactions to after Diwali. Supports the postponement, the NPCI statement as quoted, the 0.4% rate on transactions above ₹2,000, and the government-sources account of the decision.
• BusinessLine: UPI MDR rollout postponed until after Diwali. Supports the Supreme Court stay refusal, the government's affidavit statement, the four-week reply period and the 2 November hearing.
• TechCrunch: India delays digital payments fee rollout amid retailer pushback. Supports the ₹2,000 exemption, the ₹300 cap, the small-merchant exemption, NPCI's cost-sharing statement and the annual UPI cost estimate.
• BlinkMoney UPI MDR calculator. BlinkMoney's tool for estimating the fee by amount and payment type.