🔑 Key Takeaways

  • NPCI deferred the planned MDR rollout on select UPI merchant payments until immediately after Diwali.
  • The exact new implementation date has not yet been separately notified.
  • MDR is a payment-processing charge within the merchant ecosystem—not a fee charged to the customer.
  • Person-to-person UPI transfers remain free.
  • Under the announced framework, merchant payments up to ₹2,000 and eligible small-merchant transactions remain outside MDR.
  • Don’t assume the planned framework has already started just because October 15 was its original date.

Has the New UPI Charge Started?

The planned Merchant Discount Rate (MDR) framework for certain UPI payments was originally scheduled to take effect on October 15, 2026. On October 13, NPCI said the rollout would instead happen immediately after Diwali, on a date to be notified separately. As of October 26, a specific new start date has not been announced in that update. News On AIR report on NPCI’s announcement

That timing matters: the government’s September FAQ describes the planned rates and original October 15 date, but NPCI subsequently deferred the rollout. Check for a fresh NPCI or government notice before treating the framework as active.

What Is MDR?

MDR stands for Merchant Discount Rate. It is a payment-processing charge paid within the merchant payment ecosystem when a qualifying merchant transaction is processed.

It is not the same as a UPI fee charged directly to the person scanning a QR code or sending money. The Ministry of Finance says customers will not pay MDR, and that UPI app providers cannot add a platform fee for making a UPI payment under the announced framework. Ministry of Finance announcement

What Does the Announced Framework Propose?

The government’s published FAQ describes a rate structure for specified person-to-merchant (P2M) transactions:

Transaction typeTreatment in the announced framework
Person-to-person UPI transfersFree
Merchant payments up to ₹2,000No MDR
Eligible small merchants in the P2PM categoryZero MDR
Specified P2M payments above ₹2,000Generally 0.4%, capped at ₹300 for transactions of ₹75,000 or more
Certain listed sectors and capital-market paymentsSpecial rates apply

For example, the FAQ lists a flat ₹5 MDR for specified transactions in certain essential sectors and a 0.02% rate, capped at ₹300, for specified capital-market transactions. The exact treatment depends on the transaction category and merchant classification—not just the amount paid. Official MDR FAQs

These are the announced terms, not confirmation that the deferred rollout has begun. Merchants should confirm the implementation date and applicable category with their acquiring bank or payment provider.

Will Customers Have to Pay More?

Under the announced policy, MDR is a merchant-side processing charge, not a customer transaction fee. The government says banks should ensure merchants do not pass the MDR on to customers, and that UPI app providers cannot add a platform fee for making payments through UPI.

So a message saying “all UPI payments above ₹2,000 now have a customer fee” does not accurately describe the announced framework. The framework distinguishes between transaction types and says the customer-facing UPI payment remains free.

What Should Shoppers and Small Merchants Do?

For customers, no special action is needed. Continue checking your UPI app and bank statement as usual, and rely on official updates rather than forwarded messages claiming that a new customer fee has started.

Small merchants should not assume that every payment above ₹2,000 attracts MDR. The published FAQ says eligible P2PM small merchants remain at zero MDR, and classification depends on the merchant account category. Confirm your category and fee terms with your acquiring bank or payment provider.

❓ Frequently Asked Questions

Q: Will I be charged for sending money to a friend through UPI?
No. The government says person-to-person UPI transfers remain free, regardless of the amount.
Q: Does the ₹2,000 threshold mean customers pay MDR above that amount?
No. MDR is described as a merchant-side processing charge. The government says customers will not pay it.
Q: Has the proposed MDR framework started?
NPCI deferred the planned October 15 rollout until immediately after Diwali and said a specific date would be notified separately. Check for a newer official notice.
Q: Will every shop pay the same MDR?
No. The published framework includes different treatments for transaction types and merchant categories, including zero MDR for eligible small merchants.
Q: Where can I check for an update?
Check announcements from NPCI, the Ministry of Finance or the Department of Financial Services. The Department’s FAQ page links to the official published MDR FAQs.

Conclusion

The key update is the timing: NPCI deferred the planned UPI MDR rollout until after Diwali, and the specific new start date still needs to be notified. The announced framework describes charges within the merchant payment ecosystem—not a new fee for customers making UPI payments.

Check official updates before acting on claims about a start date or customer charges.