UPI MDR rollout may be delayed; NPCI weighs postponement beyond Oct 15

MDR on UPI: Last month, the government ended the zero-fee regime for UPI by allowing merchants to be charged 0.4% on transactions above Rs 2,000. UPI is used by more than 500 million people across the country for payments ranging from roadside cups of tea to iPhones. The charge is scheduled to take effect on October 15, coinciding with the annual festive season.

Shares of Pine Labs, One MobiKwik Systems and Paytm parent One 97 Communications declined during morning trading on Oct 8 as investors awaited clarity on the proposed implementation of the Unified Payments Interface (UPI) merchant discount rate (MDR).The decline followed reports that merchant associations, fintech companies and payment service providers had requested a postponement of the proposed charges.At 12: 20 pm, Pine Labs shares traded at Rs 170 on the BSE, down almost 4%. One MobiKwik Systems fell 6.5% to Rs 239, while One 97 Communications declined 4.7% to Rs 1,651.NPCI Considering Proposal To Defer Implementation Of UPI MDR Charges To January 2027 UPI MDR implementation may be postponed to January 2027According to some reports, the National Payments Corporation of India (NPCI) has received requests to defer the proposed MDR implementation until January 2027.The charges are currently scheduled to take effect on Oct 15, 2026.NPCI could decide on the requests within two days following discussions with the Finance Ministry.Industry participants have raised concerns about operational readiness, particularly confusion surrounding different MDR rates, applicable transaction categories and implementation policies.Last month, the UPI Steering Committee approved an MDR of 0.4%, equivalent to 40 basis points, on transactions exceeding Rs2,000.The proposed fee would introduce an additional processing cost for merchants accepting eligible UPI payments. RBI Governor sees limited impact on UPI transaction volumesReserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said introducing a modest MDR was unlikely to significantly affect UPI transaction volumes."As of now, we do not see any drop in volumes," Malhotra told reporters at the central bank's headquarters.He added that a small transaction fee would probably not substantially influence payment activity.His comments followed the RBI's decision to increase its benchmark interest rate and signal that further rate cuts were not currently under consideration.Malhotra also expressed confidence that bank credit growth would remain strong and continue supporting economic activity.Addressing concerns about non-banking financial companies, he said the central bank remained alert to possible asset quality risks arising from abundant liquidity.However, the RBI did not currently anticipate a deterioration in loan quality.

UPI MDR was scheduled to begin on October 15, but merchant bodies are seeking a delay until January 2027. The post Report: NPCI receives multiple requests from merchant bodies, fintechs to delay UPI MDR rollout appeared first on MEDIANAMA.

The National Payments Corporation of India (NPCI) has reportedly received requests from merchant associations, fintech companies and payment firms to postpone the implementation of the Unified Payments Interface (UPI) merchant discount rate (MDR) until January 2027.According to a Moneycontrol report citing sources, NPCI could decide on the proposed deferment within two days following discussions with the Finance Ministry.The requests come ahead of the scheduled Oct 15, 2026, implementation, with industry participants raising concerns about unclear fee structures and operational readiness.UPI MDR Explained: Why Pneucons Says New Payment Charge Could Eat 94% Of Its Margins Merchants seek UPI MDR postponement until January 2027The UPI Steering Committee last month approved an MDR of 0.4%, equivalent to 40 basis points, on transactions exceeding Rs2,000.MDR is the processing fee merchants pay banks for accepting digital payments.At the proposed rate, merchants would pay Rs8 on a Rs2,000 transaction and Rs40 on a Rs10,000 payment, although the threshold would determine applicability.Industry representatives have reportedly requested additional time because different transaction categories attract varying charges.Sources cited by Moneycontrol said merchants were particularly concerned about introducing the fee during the festive shopping season.The government is also reportedly worried that additional transaction costs could affect businesses already facing inflationary pressures.Another concern is that merchants might recover MDR expenses by increasing prices for consumers, potentially weakening demand during festive sales.NPCI had not immediately responded to the publication's request for comments. Different UPI charges create confusion for payment firmsUnlike card payments, which generally follow relatively uniform pricing structures, UPI has proposed different MDR rates for categories including utility bills, loan repayments and capital market transactions.Payment companies have raised questions about how these charges will apply across merchant categories and transaction types.Some transactions covered by UPI's proposed pricing framework cannot be processed through credit cards under Reserve Bank of India (RBI) rules.For instance, credit cards cannot be used for loan repayments or capital market transactions.Before UPI gained widespread adoption, customers commonly used net banking, Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) for such payments.Although these channels carried transaction charges, their fee structures differed from card-based MDR arrangements.

Traders' associations have sought a delay in the implementation of the UPI MRD charges until after the festive season or early next year, with the National Payments Corporation of India yet to take a call, sources told NDTV Profit.