India Postpones 0.4% UPI MDR to After Diwali

The Government of India has pushed back the introduction of a 0.4% MDR on UPI payments above ₹2,000 until after Diwali.

The National Payments Corporation of India (NPCI), which runs the payment system, said the move was to avoid a surge in retail transactions during the festive season.

NPCI’s UPI and Services Steering Committee explained that keeping the fee off the table for the next few weeks would ease the load on merchants’ backend systems and prevent glitches that could erode consumer trust.

“We decided to defer the fee to immediately post‑Diwali, a date to be notified separately,” the committee said in a statement.

Merchants in Delhi’s wholesale market, where a daily turnover of ₹10 crore flows through UPI, are relieved for now. “We’re glad the government is thinking of us,” one shopkeeper told reporters.

The fee was touted by investors as a new revenue stream for payment processors, who were slated to receive a share of the proceeds. “A predictable fee structure could stabilize earnings for the sector,” a senior analyst at a Mumbai bank added.

The original October 15 deadline was seen as risky, given that consumer spending spikes by up to 30% during the October‑December window. By delaying the rule, the government aims to keep the payment ecosystem smooth when consumers are buying gifts and food.

The next step is a formal notification that will set the exact start date. Merchants and banks are monitoring the press closely for that update, which could come as early as mid‑November.