NEW DELHI — The Union government alongside payment regulators on Tuesday decided to postpone the rollout of the Merchant Discount Rate on select commercial Unified Payments Interface transactions until after Diwali, providing temporary relief to businesses and consumers ahead of peak festive shopping. The National Payments Corporation of India confirmed the deferral following a meeting of its UPI and Services Steering Committee, noting that the revised enforcement timeline will be notified separately, with expectations pointing toward an early next-year implementation.
The proposed pricing framework, initially slated to take effect on October 15, aimed to introduce a 0.4 per cent charge on person-to-merchant transactions exceeding 2,000 rupees, with fees capped at 300 rupees for high-value purchases above 75,000 rupees. Under the scheme, routine peer-to-peer transfers, small-scale merchant receipts, and all retail transactions below the 2,000-rupee threshold—which comprise over 95 per cent of total daily volume—remain entirely exempt from any levies.
The temporary freeze follows sharp criticism from opposition political factions and trade bodies concerning potential cost pressures on small commercial enterprises. In response, authorities defended the structure as a necessary modernization measure to ensure system resilience, cyber protections, and banking infrastructure viability after years under a zero-fee mandate that financial institutions had flagged as economically unsustainable.
Defending the mechanism, the Finance Ministry underscored that the levy functions as an operational revenue-sharing model among payment processors and commercial banks rather than a government tax, maintaining that the proposed 0.4 per cent baseline remains far cheaper than standard credit card processing rates of up to 2.5 per cent. The decision to delay implementation grants market participants added leeway to prepare backend payment systems without disrupting nationwide consumer spending during the holidays.
