The plan to implement Merchant Discount Rate (MDR) on UPI payments above Rs 2,000 may be extended from October 15 to January 1, 2027. However, no final decision has been taken yet.
According to sources, talks are still going on with industry bodies and associations regarding the proposed MDR. The government is considering extending the date of its implementation, especially in view of the festive season.
There may be a delay in implementing MDR due to festive season
Generally, there is an increase in digital payments and customer spending during the festive season. Sources said the government is worried that implementing MDR could increase business costs during festival sales.
According to reports, merchant bodies, fintech companies and payment firms have demanded a delay in the implementation of MDR till January 2027. There is still some confusion in the industry regarding MDR rates and the rules for its implementation.
Payment aggregators want more stake in MDR
According to sources, payment aggregators are demanding 50 to 80 percent share in the MDR collected from banks.
The proposed MDR is yet to be implemented from Thursday, October 15. However, no final decision has been taken yet on extending the date.
RBI Governor’s statement on UPI MDR
Reserve Bank of India (RBI) Governor Sanjay Malhotra has said that the implementation of MDR is not expected to have any major impact on the number of UPI transactions.
Speaking at a press conference after the RBI’s October 2026 monetary policy review on Wednesday, Malhotra said that there has been no decline in the number of UPI transactions so far and he does not think the small fee will have any significant impact on the usage of UPI.
“The decision on MDR has already been taken. As of now we do not see any reduction in the number of transactions. I personally do not think the small fee will have any impact on the number of UPI transactions,” Malhotra said in response to a media query. UPI transactions in September
UPI transaction figures remained high in September. The total number of UPI transactions stood at 2,407 crore, while the value of transactions was Rs 29.37 lakh crore.
An average of about 802 million transactions were recorded in the system every day during this month.
UPI’s record in FY2025-26
Citing government data, the Chamber of Trade and Industry (CTI) said UPI set a new record in the financial year 2025-26. According to organization:
24,162 crore transactions were recorded on UPI.
The total transaction value was approximately Rs 314 lakh crore.
UPI’s share in the country’s total digital transactions was about 84 percent.
Merchants got Rs 198 lakh crore
Of the total Rs 314 lakh crore, merchants received about Rs 198 lakh crore through person-to-merchant (P2M) UPI payments, CTI said. The organization said transactions worth more than Rs 2,000 were just 4 per cent of the total number of transactions. However, the value of these transactions was approximately Rs 131 lakh crore. This was approximately 66 percent of the total value of merchant UPI transactions.
What is UPI MDR rule?
Under the new rules, eligible merchant transactions above Rs 2,000 will be charged 0.4 percent. This charge will have to be paid by the merchants. UPI apps cannot charge platform charges from customers. For fuel transactions above Rs 2,000, there will be a flat fee of Rs 5 per transaction.
Is UPI MDR date being extended till January 2027? Know what this means for payments above Rs 2,000.