Overview
- Parliament approved an amendment that ends the legal ban on merchant discount rates (MDR) for UPI and RuPay, clearing the way for future rules on when merchants can be charged.
- Union Finance Minister Nirmala Sitharaman told lawmakers on Monday that consumers and person‑to‑person UPI transfers will stay free and most low‑value merchant payments will not be charged.
- The National Payments Corporation of India’s UPI & Services Steering Committee will consult banks, fintechs and merchants and decide whether to introduce MDR and how to set thresholds and rates.
- UPI handled nearly 24 billion transactions worth about ₹30 trillion in July, and industry estimates put annual operating and security costs at roughly ₹15,000–20,000 crore.
- Economists and industry groups disagree on who should pay, with some urging a small, threshold‑based MDR for large merchants and others proposing transparent government reimbursements or use of RBI dividend funds to avoid passing costs to consumers.