The National Payments Corporation of India has deferred the introduction of a 0.4 per cent merchant discount rate on selected UPI payments to merchants until after Diwali, according to The Week, The Tribune and Upstox. The fee had been due to take effect on 15 October 2026. NPCI said on Tuesday, 13 October, that the new date would be notified separately.
The decision was taken by NPCI’s UPI and Services Steering Committee ‘keeping in mind the festive season’, according to the statement quoted by the reports. The deferral gives merchants and customers relief during the period of heavy festival shopping, and Diwali falls on 8 November this year, which means that the fee is on hold for at least 24 days beyond its original start, a count by IndiaX24 from 15 October.
The framework, as announced earlier, applies only to some payments. The 0.4 per cent rate would apply to eligible person-to-merchant transactions above Rs 2,000, with a cap of Rs 300 on transactions above Rs 75,000, according to the Tribune. The cap follows from the rate, because 0.4 per cent of Rs 75,000 is Rs 300, a check by IndiaX24. A payment of Rs 5,000 would carry a fee of Rs 20, according to The Week.
Several kinds of payment are exempt. Transfers between individuals, such as sending money to family or friends, are not covered, and person-to-merchant payments of Rs 2,000 or less remain free, according to the reports. The fee applies to specified merchant categories, but The Week notes that NPCI has not yet disclosed which categories are eligible.
The article lists questions that remain open. NPCI has not said whether some sectors will be exempt, whether merchants will be able to pass the charge on to customers, or whether the framework itself may change before it is introduced after Diwali, according to The Week. IndiaX24 has not found answers in the other reports.
The idea of charging for UPI has been controversial. The finance ministry said in June 2025 that there was no plan to levy a merchant discount rate on UPI transactions, according to an All India Radio item in the search results, so the new framework is a change from that position, although the reports reviewed do not explain how the two fit together. UPI payments have been free for merchants and customers for most users, which is general background.
The cost to merchants can be illustrated. A shop that takes Rs 1 lakh a month in eligible payments of more than Rs 2,000 would pay Rs 400 in fees at 0.4 per cent, a calculation by IndiaX24 that assumes all of the payments are eligible and that none exceeds Rs 75,000. For a business with thin margins the sum may matter, but the reports reviewed do not give any merchant’s reaction.
The timing also matters for the digital payments industry. The reports reviewed do not give UPI’s latest transaction volumes or say how much revenue the fee was expected to raise, so IndiaX24 cannot size the change for the payments industry.
Customers and shopkeepers should note that nothing changes for now. Payments continue to be free of any such fee until NPCI announces a date, according to the reports. IndiaX24 will report the new date and the list of eligible merchant categories when they are published.
Image: An Indian rupee banknote (file photo; a stand-in image for UPI payments). Photo by Ravi Dwivedi, licensed under CC BY-SA 4.0, via Wikimedia Commons.
Leave a Reply