- UPI payment fees and Merchant Discount Rate structure changes
- The Union Ministry of Finance proposed amendments to the Indian payment system, which the RBI is now regulating under the Payment and Settlement Systems Act.
- The government introduced a new structure for Merchant Discount Rate (MDR) via a ministry circular.
Steering Committee defers MDR levy on high-value UPI transactions
What happened
The National Payments Corporation of India (NPCI) postponed the rollout of the Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions. The levy, which was scheduled to begin on October 15, 2026, will now be implemented immediately after Diwali, on a date to be notified separately. The Steering Committee made this decision, citing the festive season.
Why it matters
The MDR was planned as a 0.4 per cent charge on UPI transactions exceeding Rs 2,000. This postponement affects transaction costs for merchants and payment processors. The decision comes as the Supreme Court seeks a legal basis for the MDR.
The Government of India introduced a new structure for the Merchant Discount Rate via a ministry circular, and the Reserve Bank of India is regulating amendments to the Indian payment system.
Who's involved
- steering committeeThe Steering Committee that decided to defer the MDR levy
- Government of IndiaThe Government of India, which is involved in the regulatory framework for the MDR
- supreme courtThe supreme court, which is seeking a legal basis for the MDR
- ZerodhaZerodha, whose founder criticized the proposed MDR levy
- Nirmala SitharamanNirmala Sitharaman, who clarified that the Steering Committee would make the final decision
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- ZerodhaSpeculative
Zerodha could see reduced immediate operational friction and cost risk due to the regulatory deferral.
- PaytmSpeculative
Paytm may see reduced immediate operating costs as a payment processor due to the regulatory deferral.
- Government of IndiaSpeculative
The Government of India could see changes in revenue collection timelines due to the policy deferral.
Possible ripples
Who this could reach next, traced step by step from the reporting. Possibilities worth considering, not forecasts.- RBI must justify MDR levy after Supreme Court directs explanationRBI must explain legal basis for MDR levy after Supreme Court orderLikely
- MDR levy deferral provides immediate relief to BanksThe deferral of the MDR levy provides immediate relief to Banks.Likely
- Paytm may see reduced immediate costs from MDR levy deferralPaytm may see reduced immediate costs from MDR levy deferralLikely
- Finance ministry faces uncertainty over digital transaction revenue after MDR levy deferralFinance ministry faces uncertainty over digital transaction revenue after MDR levy deferralPossible
- Zerodha may benefit from MDR levy deferralZerodha may benefit from the deferral of the MDR levy on high-value UPI transactions.Possible
Keep exploring
The entities involved
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Government of India
legislative, executive and judiciary authority of India
- The Government of India established the Indian Council for Cultural Relations (ICCR) as an initiative of the Government of India involving Sri Lanka to promote regional peace and prosperity.
- Indian government bodies, including the Ministry of External Affairs and Directorate General of Shipping, are monitoring maritime interests and coordinating responses to security incidents in the Gulf region.
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Nirmala Sitharaman
Indian politician
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supreme court
highest court in a jurisdiction
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