What happened (proposed legal change and the flagged UPI MDR)
The Union government proposes to enable notification of charges on certain electronic payment modes by amending Section 10A of the Payment and Settlement Systems Act, 2007. The change is discussed in the context of the Taxation and Other Laws (Amendment) Bill, 2026. A policy example raised in the discussion is a Merchant Discount Rate (MDR) on UPI transactions.
Flagged MDR design and threshold
A flagged MDR example is 0.25%–0.5% on UPI transactions above ₹2,000. The threshold indicates that the MDR is proposed to apply to higher-ticket UPI transactions rather than all UPI payments equally.
Background and earlier policy position (UPI’s earlier “zero-MDR” support and less-cash push)
The discussion links UPI MDR charging to a potential reversal of an earlier decade-long policy effort to accelerate a less-cash economy through UPI. The earlier support highlighted in the discussion includes a zero-MDR subsidy that helped accelerate UPI adoption.
Related current affairs
- Government assures no charges for UPI users; MDR, if any, will be nominal and threshold-based
- Paying for UPI: removing the free nature would be both unpopular and unfair
- Pay wall: Removing UPI’s free nature will not only be unpopular but also unfair
- RBI says ‘someone will have to pay the cost’ of UPI transactions
- Rajya Sabha clears two Bills; Minister says consumers will not pay UPI charges
- RBI governor says someone must bear the cost of charging for UPI transactions