The implementation of the new merchant discount rate (MDR) framework for Unified Payments Interface transactions may be deferred to January 1, 2027, from the proposed October 15 rollout, according to reports. The news sent shares of Indian fintech and digital payments companies tumbling on Thursday.
Why the delay is being considered
The proposed deferment is aimed at giving merchants and the payments ecosystem more time to prepare, particularly during the peak festive season when digital transactions surge. Retail traders' associations have pushed back against the new levy, and discussions are reportedly underway between the National Payments Corporation of India, the Finance Ministry and the UPI Steering Committee.
A final decision is yet to be formally announced, but January 1 has emerged as the likely new implementation date. Reports also say an exemption for businesses with annual turnover of up to Rs 40 lakh is under consideration, which would expand the proposed exemption considerably.
What the framework proposes
Under the announced framework, a 0.4 per cent MDR would apply to person-to-merchant UPI transactions above Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above. Certain categories such as bill payments, fuel and education would attract a flat Rs 5 fee on transactions above Rs 2,000. Consumers would not pay the MDR, and person-to-person transactions would remain outside the levy.
The return of MDR on UPI, nearly seven years after it was scrapped, could generate Rs 15,000-20,600 crore a year for India's digital payments and banking ecosystem, according to brokerage estimates. The rollout comes amid a legal challenge: the Supreme Court on September 28 refused to stay the Centre's decision to impose MDR on specified transactions, though it issued notices to the Centre, the RBI and NPCI.
Market reaction
Shares of One 97 Communications, which operates Paytm, fell as much as 10 per cent intraday before ending 5.42 per cent lower at Rs 1,640. One Mobikwik Systems slid 8.47 per cent during the session and closed 4.57 per cent lower at Rs 244.30, while Pine Labs dropped as much as 4.96 per cent before settling 4.39 per cent lower at Rs 169.75.
UPI has become deeply embedded in retail payments, with September recording 24.07 billion transactions worth Rs 29.37 trillion, averaging about 802 million transactions a day.
Sources:
UPI MDR Framework Rollout Likely To Be Deferred To January 1 — The Indian Express
Fintech stocks decline as MDR on UPI likely to be deferred to January 1 — Business Standard
Why the delay is being considered
The proposed deferment is aimed at giving merchants and the payments ecosystem more time to prepare, particularly during the peak festive season when digital transactions surge. Retail traders' associations have pushed back against the new levy, and discussions are reportedly underway between the National Payments Corporation of India, the Finance Ministry and the UPI Steering Committee.
A final decision is yet to be formally announced, but January 1 has emerged as the likely new implementation date. Reports also say an exemption for businesses with annual turnover of up to Rs 40 lakh is under consideration, which would expand the proposed exemption considerably.
What the framework proposes
Under the announced framework, a 0.4 per cent MDR would apply to person-to-merchant UPI transactions above Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above. Certain categories such as bill payments, fuel and education would attract a flat Rs 5 fee on transactions above Rs 2,000. Consumers would not pay the MDR, and person-to-person transactions would remain outside the levy.
The return of MDR on UPI, nearly seven years after it was scrapped, could generate Rs 15,000-20,600 crore a year for India's digital payments and banking ecosystem, according to brokerage estimates. The rollout comes amid a legal challenge: the Supreme Court on September 28 refused to stay the Centre's decision to impose MDR on specified transactions, though it issued notices to the Centre, the RBI and NPCI.
Market reaction
Shares of One 97 Communications, which operates Paytm, fell as much as 10 per cent intraday before ending 5.42 per cent lower at Rs 1,640. One Mobikwik Systems slid 8.47 per cent during the session and closed 4.57 per cent lower at Rs 244.30, while Pine Labs dropped as much as 4.96 per cent before settling 4.39 per cent lower at Rs 169.75.
UPI has become deeply embedded in retail payments, with September recording 24.07 billion transactions worth Rs 29.37 trillion, averaging about 802 million transactions a day.
Sources:
UPI MDR Framework Rollout Likely To Be Deferred To January 1 — The Indian Express
Fintech stocks decline as MDR on UPI likely to be deferred to January 1 — Business Standard
