NPCI defers merchant discount rate on UPI transactions post-Diwali

The implementation of merchant discount rate (MDR) on select Unified Payments Interface (UPI) transactions, scheduled to begin on October 15, has been deferred until after Diwali, the National Payments Corporation of India (NPCI) said on Tuesday.

"UPI and Services Steering Committee today decided that, keeping in mind the festive season, Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions, shall be implemented immediately post Diwali at a date to be notified separately," NCPI said in a statement.

The government had last month announced a revised framework providing for a 0.4% MDR on specified UPI merchant transactions above ₹2,000, capped at ₹300 per transaction.

A flat charge of ₹5 would apply to transactions above ₹2,000 in select sectors, including railways, telecommunications, insurance and fuel.

The decision to defer implementation comes amid a legal challenge to the Centre's move to introduce MDR on specified UPI transactions.

On September 28, the Supreme Court declined to stay the Centre's decision but sought an affidavit from the government explaining the basis and legal character of the charge.

A bench headed by Chief Justice Surya Kant, also comprising Justices Joymalya Bagchi and V Mohana, issued notices to the Centre, the Reserve Bank of India (RBI) and NPCI, directing them to file their responses within four weeks.

The public interest litigation was filed by advocate Anjan Datta, who challenged the introduction of MDR on specified UPI transactions.

The Supreme Court declined to grant interim relief and asked the government to place its submissions on affidavit.