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Diwali is over, and the next question for anyone who uses UPI is simple: when does the new merchant charge actually start?
In mid-October, NPCI deferred the 0.4% Merchant Discount Rate that was originally scheduled for 15 October. The official line was clear — the charge on select person-to-merchant UPI transactions would be implemented “immediately post Diwali” at a date to be notified separately. As of now, that exact date has still not been announced. That gap between “after Diwali” and a firm calendar date is what is driving most of the current searches.
The structure itself has not changed. On eligible merchant payments above ₹2,000, a 0.4% MDR will apply, capped at ₹300 per transaction. Certain essential categories such as fuel, railways, telecom, insurance and education attract a flat ₹5 instead. Person-to-person transfers remain completely free. Payments of ₹2,000 or less to merchants stay free. Small merchants under the defined threshold continue to be exempt. UPI AutoPay for recurring payments is also kept outside the charge.
Importantly, the customer does not pay this fee. MDR is a cost borne by the merchant. In practice, some merchants may absorb it, while others may adjust prices or prefer alternative payment methods for higher-value transactions. That is why the change matters even if the app on your phone continues to look the same.
What remains unsettled is the start date. NPCI has not issued a fresh notification fixing the day. Until that happens, the existing free structure continues. Banks, payment apps and merchants have had extra weeks to prepare systems, but the final switch will only happen once the new date is formally communicated.
For ordinary users the practical position is straightforward. Everyday UPI — sending money to family, paying small bills, buying groceries under ₹2,000 — stays free. Larger purchases at shops and online merchants are the ones that will eventually carry the merchant-side cost. Whether that cost stays invisible or shows up in pricing will depend on how individual merchants respond once the charge goes live.
The useful thing to watch in the coming days is not speculation on social media, but an official communication from NPCI. Until that appears, the 0.4% MDR remains a confirmed policy that has not yet been switched on. The uncertainty around the exact date is temporary; the framework itself is not.
