The rollout of merchant discount rate charges on UPI payments may be deferred from October 15 to January 1, 2027, following pushback from traders.

Merchant bodies, fintechs and payment companies have asked the National Payments Corporation of India to delay implementation until after the festive season. They cited confusion over varying rates and their applicability.

Under the framework, an MDR of 0.4 per cent would apply to eligible person-to-merchant UPI transactions above Rs 2,000, capped at Rs 300 per transaction. Person-to-person transfers would remain free.

The government has said around 96 per cent of merchant UPI transactions will remain unaffected. A proposal to exempt businesses with annual turnover up to Rs 40 lakh is also under consideration.

NPCI is expected to take a decision within days after talks with the finance ministry. The final call has not been announced.

Finance Minister Nirmala Sitharaman said on Thursday that any deferment would be handled by stakeholders, leaving the timing decision to the payments ecosystem.

The October to December period is India’s peak festive shopping season, when UPI transactions typically rise sharply. A delay would spare merchants new costs during their busiest weeks.