NPCI Postpones Merchant Charges to Safeguard Festive Shopping
The announcement that UPI Merchant Charges Deferred brings immediate operational relief to millions of retail merchants and small businesses across India. The National Payments Corporation of India (NPCI) confirmed that the proposed 0.4 percent Merchant Discount Rate (MDR) on select person-to-merchant (P2M) digital transactions above ₹2,000 will be implemented only after Diwali 2026.
The NPCI Steering Committee approved this strategic delay to ensure that peak festive shopping proceeds smoothly without compliance friction or merchant pushback. Consequently, shopkeepers and digital payment acceptors will not incur additional processing fees during the peak shopping period surrounding Diwali.
Detailed Comparison of Proposed Fee Structure Across Payment Methods
Under the upcoming framework following the UPI Merchant Charges Deferred period, standard peer-to-peer (P2P) transfers and routine purchases up to ₹2,000 will remain completely free of any merchant charges. The table below illustrates the structure of the upcoming payment processing charges compared to traditional payment systems.
| Payment Method Category | Transaction Threshold | Standard Applicable MDR | Maximum Applicable Fee Cap |
| Person-to-Person (P2P) UPI | All Transaction Amounts | 0.00 Percent (Always Free) | No Fee Applicable |
| Micro Merchant P2M UPI | Transactions Up to ₹2,000 | 0.00 Percent (Zero MDR) | No Fee Applicable |
| Commercial P2M UPI (Post-Diwali) | Transactions Above ₹2,000 | 0.40 Percent of Value | Capped at ₹300 Max |
| Utility & Fuel Category UPI | Transactions Above ₹2,000 | Concessional Flat Fee | Flat ₹5 per Transaction |
| Standard Credit Card MDR | All Transaction Values | 1.50% to 2.50% Average | Variable Card Network Rates |
Transaction Fee Calculation Metrics for High-Value Purchases
When the UPI Merchant Charges Deferred window concludes after Diwali, payments will follow a progressive fee structure. Importantly, regulations strictly prohibit merchants from passing these processing costs onto individual consumers at checkout.
| Transaction Value Band | Calculation Basis | Total Payable MDR Fee | Primary Consumer Cost Impact |
| Purchase Value ₹1,500 | Below ₹2,000 Threshold | ₹0.00 (Zero Fee) | Entirely Free for All Parties |
| Purchase Value ₹3,000 | 0.4% Standard Calculation | ₹12.00 Payable | Merchant Absorbs Total Fee |
| Purchase Value ₹50,000 | 0.4% Standard Calculation | ₹200.00 Payable | Merchant Absorbs Total Fee |
| Purchase Value ₹75,000+ | Reaches Maximum Capped Rate | ₹300.00 Maximum Cap | Fee Ceases to Scale Further |
Summary of Primary Financial Metrics and Regulatory Status
The table below summarizes the key metrics surrounding the deferred merchant discount rate framework.
| Serial No. | Primary Operational Metric | Official Record Status | Core Market Significance |
| 1 | Focus Financial Keyword | UPI Merchant Charges Deferred | Protects festive retail commerce |
| 2 | Revised Effective Window | Post-Diwali 2026 Phase | Ensures zero festive friction |
| 3 | Standard MDR Percentage | 0.40 Percent on P2M | Lower than credit card rates |
| 4 | Maximum Transaction Cap | ₹300 per Transaction | Protects high-value merchants |