The National Payments Corporation of India’s (NPCI) UPI and Services Steering Committee has deferred the implementation of Merchant Discount Rates (MDR) on select person-to-merchant (P2M) UPI transactions until immediately after Diwali.

The move aims to protect consumer sentiment and keep operational costs steady for businesses during the peak festive shopping season. A specific implementation date will be announced separately.

Key Highlights

• Festive Relief for Retail: The deferment ensures merchants face no additional payment processing costs during peak festive demand, helping avoid disruptions to consumer spending.
• The Approved MDR Structure:
  • Applies only to eligible P2M transactions above Rs 2,000 at a rate of 0.4%.
  • Capped at Rs 300 for high-value transactions of Rs 75,000 and above.
  • Everyday low-value payments and small merchants remain fully exempt, preserving zero-cost digital transactions for general consumers.
• Timeline Adjustment: Originally notified on September 15 for an October 15 rollout, the framework will now take effect post-Diwali, giving banks, payment aggregators, and merchants additional runway to align their systems and communicate terms clearly.

Jewellery purchase values routinely exceed the Rs 2,000 threshold and frequently touch or surpass the Rs 75,000 cap. Given typical retail margins of 2%–6% on bullion and plain gold jewellery, absorbing a 0.4% fee—or up to Rs 300 per large transaction—would have directly eaten into festive profitability. The deferral keeps bottom lines protected through Dhanteras and Diwali.

Introducing transaction fees just as footfall surges would have forced retailers to decide whether to absorb the cost or pass it on to buyers (via checkout surcharges or selective discounts). Avoiding this choice prevents awkward billing counter negotiations and cart abandonment during rush hours.