UPI MDR rollout delayed? 0.4% fee on payments above ₹2,000 may start in January 2027

India is considering delaying the implementation of a proposed fee on large-value transactions through the Unified Payments Interface (UPI) by a few months, Reuters reported on Thursday, citing a regulatory official and an industry executive familiar with the discussions.

The proposed 0.4% fee on merchant transactions above ₹2,000 was scheduled to take effect from 15 October. A final decision has not yet been taken by the National Payments Corporation of India (NPCI), the sources told Reuters.

The delay, if approved, could push the implementation to January, giving payment companies more time to upgrade their systems and allowing merchants to navigate the upcoming festive shopping season without an immediate change to UPI payment costs.

The development comes after India moved last month to introduce a charge on large UPI merchant transactions, ending more than six years of zero-cost UPI payments. The proposed fee is an interchange or merchant-side charge and does not mean consumers will directly pay 0.4% every time they make a UPI payment.

UPI has become a major part of India’s payments ecosystem, with more than 500 million users. NPCI data shows that UPI processed 24.51 billion transactions worth ₹29.82 lakh crore in August 2026.

Why is the UPI MDR rollout being considered for a delay?

The proposed 15 October implementation would have coincided with India’s festive season, when consumer spending typically rises sharply. According to the sources cited by Reuters, postponing the rollout could prevent disruptions to retail payments during this period while giving payment companies additional time to prepare.

The industry is also expected to use the additional time to upgrade systems and work out how the new fee will be handled without passing the cost on to consumers.

The proposed charge has already faced opposition from retailers and a large broker. Its introduction was expected to create a new monetisation opportunity for digital payments companies, which could receive a share of the fee.

A delay would therefore have implications not only for merchants and payment firms but also for the broader business model around UPI. For consumers, however, the immediate impact is likely to be limited because the proposed charge is designed to apply on the merchant side rather than as a direct fee on UPI users.

What happens to UPI payments and the proposed fee now?

For consumers, UPI payments remain unchanged for now. The proposed 0.4% fee has not been cancelled, but its implementation could be pushed back by a few months if NPCI approves the delay.

The distinction is important because the proposed charge applies to eligible merchant transactions above ₹2,000. It does not mean that consumers would automatically see a 0.4% charge added to their UPI bills.

The delay would also give retailers more time to prepare for any changes in payment costs. This could be particularly relevant during the October-December festive period, when UPI usage typically rises alongside retail and online spending.

The uncertainty has already affected payment stocks. Shares of Paytm and One Mobikwik Systems fell sharply on Thursday following reports of a possible delay, while Pine Labs also declined. Investors had viewed the proposed UPI fee as an important monetisation opportunity for digital payment providers.