NPCI formally defers India's 0.4% UPI merchant fee until after Diwali

The National Payments Corporation of India confirmed on 13 October 2026 that it is postponing the merchant discount rate it had planned to switch on for UPI from 15 October. The decision came from NPCI's UPI steering committee, which pointed to the festive shopping season. The fee will now begin at some point after Diwali, and NPCI has said it will announce the exact start date separately. The charge itself is unchanged for now. It is a 0.4% fee on eligible person-to-merchant UPI payments above 2,000 rupees, capped at 300 rupees per transaction. Payments of 2,000 rupees or less are exempt, as are small merchants who receive under 100,000 rupees a month through UPI. Person-to-person transfers are not affected. NPCI has framed the revenue as a way to fund UPI's running costs, fraud prevention and security. The delay follows weeks of pushback from retailers, trader associations and fuel station operators, some of whom warned they would stop accepting larger UPI payments if the fee went live. Reports earlier in October had suggested a slip to January; the official line is now only 'after Diwali', so the start could come sooner than that. For online merchants selling into India, the practical effect is that high-value UPI checkouts stay free through the peak festive period, but the fee is postponed rather than withdrawn. UPI handled about 24 billion transactions in September, so even a 0.4% charge on the larger tickets will matter to margins, routing choices and the relative cost of UPI versus cards once it takes effect.