Now Reading: No UPI charge yet, but law enables future MDR
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No UPI charge yet, but law enables future MDR
Finance minister Nirmala Sitharaman assured Parliament on Monday that consumers and small merchants will continue to use UPI without any transaction charge. She was replying to a debate on the Taxation and…
The Story in Brief
Finance minister Nirmala Sitharaman assured Parliament on Monday that consumers and small merchants will continue to use UPI without any transaction charge. She was replying to a debate on the Taxation and Other Laws (Amendment) Bill, 2026, which removes the statutory bar on levying a merchant discount rate (MDR) on UPI and RuPay debit card transactions. The Bill, passed by both Houses, only creates an enabling framework, no MDR has been finalised.
The Parliamentary Standing Committee on Finance has flagged that the current UPI ecosystem is financially unsustainable, with a ₹2,000 crore government incentive covering only 11% of the industry's actual costs of ₹20,700 crore. The government is exploring two options: restoring MDR for high-value transactions or high-turnover merchants, and a tiered incentive structure to phase out subsidies. The final framework will be decided by the NPCI-led steering committee.
The Indian Opinion
The loudest narrative, that the government is about to slap a fee on every UPI payment, is false. The enabling law does nothing of the sort. But the other extreme, that zero MDR can continue forever, ignores the Rs 20,700 crore hole in the system. The real test will be the steering committee's decision: will high-value merchant MDR be set at a rate that keeps digital inclusion intact while closing the subsidy gap? The number to watch is the threshold above which MDR applies.
Sources (3): hindustantimes.com, thehindu.com, legal.economictimes.indiatimes.com
This story was synthesised by AI from the 3 sources linked above.
