A preview of PostgreSQL 9.5

MERGE also works with lower isolation levels, but it can cause locking problems (no different than individual INSERT, UPDATE, DELETE), so to be 100% sure that nothing interferes with it, SERIALIZABLE is required.

I'd love to help on MERGE with PostgreSQL, I just think I'm not skilled enough. However after your comment I'll try to look what I can do and if I can jump over that barrier :-) The thing is that if you're already implemented UPSERT, it seems very close to full working MERGE. Simplifying things, all the infrastructure is already in place, as I said it's no different than the 3 individual INSERT, UPDATE, DELETE statements (with some conditions), just combined into one statement and possibly interleaved. However I might be wrong, as I haven't done any real RDBMS development.