Govt to impose UPI payment charges after Diwali:Move to provide relief to shopkeepers amid festive season

The government will implement UPI charges or the Merchant Discount Rate (MDR) post-Diwali after its original plan to roll it out from 15 October was deferred, the NPCI said on Tuesday, 13 October, 2026. Shopkeepers and payment companies have been exempted owing to the festive season. The UPI transactions will remain free for shopkeepers for now. The government has extended the implementation date of the 0.4% merchant fee to avoid additional burden on merchants during the festive season. 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 on a date to be notified separately. -NPCI said in a statement on Tuesday. The MDR has to be paid by merchants, not consumers and capped at ₹300 for transactions of ₹75,000 or more. Government spends ₹8,276 crore in 4 years to keep UPI free The Central Government has spent ₹8,276 crore over four fiscal years to promote Unified Payments Interface (UPI) transactions and keep the service free for users. To boost digital payments across the country, the government launched an incentive scheme in the 2021–22 financial year. Under this scheme, an incentive of 0.15% was provided on UPI payments of up to ₹2,000 made to small merchants. Rapid Growth in Digital Payments Between 2021–22 and 2024–25, the government disbursed a total of ₹8,276 crore in incentives to financial institutions and service providers to ensure seamless and zero-cost transactions for everyday users. Driven by these continuous promotional efforts and reliable infrastructure, UPI adoption has grown rapidly across India. As of June 2026, the country has approximately 55.5 crore (555 million) active UPI users. UPI charges could push small merchants back to cash Ajay Srivastava, founder, GTRI, had said that levying UPI fees could push small merchants (shopkeepers) back to cash. So, UPI should anyway remain free. Did you know? Govt already levies MDR on credit debit card transactions: According to Harsh Vardhan Masta, chief executive officer of PB Pay, the payments platform of PB Fintech, MDR on credit card transactions can range from 1.5% to 3% of the transaction amount, depending on the card network, with no ceiling. While for debit cards, it ranges from 0.4% to 0.90% with no upper limit.