With consumer spending picking up ahead of major celebrations across the country, scrutiny around digital transaction pricing has returned to center stage. Following a GST Council gathering, Union Finance Minister Nirmala Sitharaman addressed inquiries regarding whether the forum reviewed the proposed rollout of merchant discount rate charges on UPI payments. Nirmala Sitharaman stated that the gathering was strictly focused on the GST Council agenda and that MDR was not discussed during the proceedings, adding that the matter will be handled by the specific bodies responsible for governing it.
Deliberations over Postponing Implementation to 1 January 2027
Amid strong demand from merchant communities, authorities are considering shifting the tentative launch date from 15 October to 1 January 2027, though no final decree has been made. A dedicated session was held on 7 October by the UPI and service steering panel operating under the oversight of NPCI to examine appropriate scheduling. The period spanning October through December brings elevated shopping volumes due to Diwali, Chhath, and Christmas, driving a massive surge in everyday digital checkout payments. Business owners maintain that introducing fresh transaction levies right in the middle of festive sales could complicate commerce, making an extension into early 2027 a more viable transition window.
Key Highlights from the 7 October Panel Meeting
The 7 October consultation convened by NPCI reviewed the foundational framework planned for MDR alongside operational timing constraints. Members deliberated on the practical mechanics of the charge, but the assembly concluded without a conclusive decision to formally scrap the 15 October target in favor of 1 January. As a result, the delay remains an active proposal under evaluation. The final operational clarity will only emerge once NPCI and affiliated stakeholders arrive at a collective resolution.
Proposed MDR Structure and Applicable Transaction Limits
The merchant discount rate represents the processing fee deducted across the payment network from retailers receiving digital funds. Under the proposed blueprint, an MDR levy of 0.40 percent will apply to specific person-to-merchant UPI payments exceeding the value of 2,000 rupees. To prevent excessive deductions on higher tickets, the rules establish a hard ceiling capped at 300 rupees for transactions standing at or above 75,000 rupees. The mechanism is structured so that customers do not face direct out-of-pocket deductions at the register, keeping the operational cost confined to merchants using the payment infrastructure.
