Home Glam Buzz UPI MDR on Payments Above ₹2,000 Deferred Until After Diwali — What Merchants Should Know

UPI MDR on Payments Above ₹2,000 Deferred Until After Diwali — What Merchants Should Know

Team GlamBug
October 17, 2026
8 min read

Merchants have started receiving a notice about the merchant discount rate (MDR) on UPI payments. According to the notice, which cites a communication from NPCI dated 13 October 2026, the MDR on UPI person-to-merchant (P2M) transactions above ₹2,000 will not start before Diwali. It will be implemented after Diwali, on a date that will be announced separately.

This is a postponement, not a cancellation. This post explains what the notice says, what press reports add, what is still unknown, and what a jewellery business, a reseller or a wholesale buyer can do now.

Based on the notice as received on 17 October 2026 and on the press reports linked at the end. Check with your own bank or payment provider for the terms that apply to your account.

What the notice says

  • The date of the communication: NPCI's communication is dated 13 October 2026.
  • The payments covered: UPI person-to-merchant (P2M) transactions above ₹2,000.
  • The change: the MDR on those payments is deferred until after Diwali. The date it starts will be notified separately.
  • What merchants are asked to do: take note of the change, and contact their bank's relationship manager or support for help.

What press reports add

The notice itself does not give a rate or exemptions. Press reports say the proposed rate is 0.4%. This is not in the notice, so confirm with your bank. The same reports say:

  • Rate: 0.4% on UPI payments to merchants above ₹2,000.
  • Cap: for payments of ₹75,000 and above, the charge is capped at ₹300 per payment.
  • Exempt: person-to-person UPI transfers stay free, and payments of ₹2,000 or less carry no MDR. Small merchants receiving up to ₹1 lakh a month through UPI are reported to pay no MDR. Whether you qualify depends on how your merchant account is categorised, so check yours with your bank.
  • Share of payments: NPCI is reported as saying that more than 96% of UPI merchant payments are ₹2,000 or less, so about 96% of merchant transactions would be unaffected.
  • Essential sectors: railways, telecom, insurance, fuel and agricultural inputs are reported to attract a flat ₹5 per payment. Confirm the full list of categories with your bank.
  • Customers: merchants are not to pass MDR charges on to customers. Manorama Yearbook adds that banks have been advised to ensure this.
  • Credit-linked UPI: payments made with a credit card on UPI (for example RuPay credit cards) may follow different rules. Razorpay's guide says an MDR of about 1.1% to 2% applies to those, so do not assume they are exempt. Ask your bank.
  • GST: merchants are reported to be able to set off the GST paid on MDR against their output tax. Ask your accountant how this applies to you.

These details come from press reports, not from the notice. Rules can change before they start.

What the cap means for wholesale orders

Wholesale jewellery orders are often large. Press reports say the charge is capped at ₹300 for a payment of ₹75,000 or more. That is 0.4% of ₹75,000, and on bigger payments the percentage is lower: on a ₹1 lakh payment, ₹300 is at most 0.3%, and on ₹2 lakh it is at most 0.15%. If the reported rules are confirmed, large UPI payments would cost less in percentage terms than mid-sized ones. Confirm this with your bank before you plan around it.

Two terms, in plain words

  • MDR (merchant discount rate) is a fee a merchant pays to the bank or payment provider for accepting a digital payment. It is usually a percentage of the payment.
  • UPI P2M (person-to-merchant) means a customer paying a business through UPI, for example by scanning a QR code or paying to a business UPI ID. It is different from sending money to a friend.

What we do not know yet

The notice does not settle these, so be careful with anything that claims to:

  • The start date. It says "after Diwali", with a date to come.
  • Who bears the cost in your case. How the fee is charged depends on your bank or provider's terms.
  • Whether your account type is covered. Check whether your QR code, payment link or merchant category falls under the new rules, or under an exemption.

Why it matters in a festive season

The weeks before Diwali are busy for jewellers and gift sellers, and many sales are above ₹2,000. If a fee will apply to those payments later, it can change your margin on larger sales. The deferral gives you time to plan, but the date is not fixed yet.

What to do now: a checklist

  1. Ask your bank or payment provider in writing what applies to your account: the rate, the start date, and whether it covers all UPI payments above ₹2,000 or only some.
  2. Note which of your sales are above ₹2,000. Look at your last few weeks of UPI receipts to see how much of your volume would be affected.
  3. Compare your payment options. Cards, net banking, bank transfer and UPI may carry different costs for you. Compare them once the rates are confirmed.
  4. Check your prices and margins. If you will pay a fee on larger UPI sales, work out whether it changes your minimum margin on an item. Do not change prices before you know the rate.
  5. Keep your invoices and receipts in order. Clear records make it easier to see what you paid and why.
  6. Watch for the announcement from your provider and from NPCI. Plan to review again when the date is notified.

If you buy from GlamBug

If you buy wholesale silver jewellery from us, you can order in the B2B app, on WhatsApp or on a video call, and we accept the payment modes that suit you as a buyer. Our order process is explained in a separate post, and our wholesale 925 silver jewellery page has the catalogue overview. If you have questions about paying us, message us on WhatsApp and we will help you.

Frequently asked questions

What did NPCI's communication of 13 October 2026 say about UPI MDR?
According to the notice merchants have received, the MDR on UPI person-to-merchant transactions above ₹2,000 will be implemented after Diwali, on a date that will be notified separately. It is a postponement, not a cancellation.

Is the MDR on UPI payments applying now?
The notice says it is deferred until after Diwali, so it is not starting before then. The new start date has not been announced in the notice.

What is MDR?
MDR stands for merchant discount rate. It is a fee a merchant pays to a bank or payment provider for accepting a digital payment, usually a percentage of the amount.

What is the MDR rate on UPI payments above ₹2,000?
Press reports say the proposed rate is 0.4%, capped at ₹300 for payments of ₹75,000 and above. This is not in the notice, so confirm with your bank or payment provider.

Does it apply to payments of ₹2,000 or less, or to person-to-person transfers?
Press reports say payments up to ₹2,000 carry no MDR and person-to-person UPI transfers stay free. The notice only mentions transactions above ₹2,000, so confirm the details for your account.

Is there a limit on the fee for large payments?
Press reports say the charge is capped at ₹300 for a payment of ₹75,000 or more. This is not in the notice, so confirm with your bank.

What should a small jeweller do right now?
Ask your provider what applies to your account, see how many of your sales are above ₹2,000, and review your payment options and margins once the rate is confirmed.

Sources

Talk to us

Read more about wholesale 925 silver jewellery, or message us on WhatsApp at +91 72079 01555, Monday to Saturday, 10am to 8pm.