The National Payments Corporation of India (NPCI) has officially confirmed the postponement of the proposed UPI merchant discount rate (MDR) implementation beyond 15 October 2026. As reported by multiple sources, the deferment comes after stockbrokers raised concerns about the potential cost implications of these new charges. Sebi chairman Tuhin Kanta Pandey stated at an event that NPCI has just issued a statement, and we are still in talks with them, indicating ongoing regulatory dialogue on the framework.
Despite the postponement, NPCI's previously published clarification continues to exclude recurring UPI AutoPay mandates from the prescribed MDR framework. According to recent reports, recurring SIP AutoPay mandates, including mutual fund SIP payments, remain exempt from the proposed MDR charges. This exemption addresses a key concern raised by the brokerage industry, as money transferred into trading accounts for systematic investment plans does not necessarily result in immediate trading activity.
Stockbrokers have made formal representations to Sebi and the central government seeking reconsideration of the charges, with their primary concern centered on the fact that money transferred into a trading account does not necessarily result in a trade. The charges pose particular challenges for brokers accepting UPI payments from investors, as under Sebi rules, registered brokers must use valid UPI handles and display them on their websites to ensure investors transfer money only to verified accounts. The postponement provides additional time for the industry to assess the framework's impact on their operations.
The original framework introduced a tiered structure for MDR charges on UPI transactions, with the new framework mandating an MDR of 0.4% on person-to-merchant (P2M) UPI transactions above ₹2,000. For higher-value transactions of ₹75,000 and above, the fee is capped at ₹300 per transaction. Capital-market transactions involving mutual funds, securities and brokers will attract a lower MDR of 0.02%, also subject to a cap of ₹300. The brokerage industry is considering strategic responses to manage the new cost structure, with brokers considering levying additional charges on customers to offset the cost of MDR on 2 October. The planned introduction of merchant discount rate charges represents a significant concern for the industry, particularly given the regulatory requirements for verified payment handling.
