Merchant Discount Rate on digital transactions applies to merchants only, not consumers, Finance Minister Nirmala Sitharaman said--clearing the government stance amid growing speculations that common citizens would pay a fee on UPI transactions. Hitting out at Congress's remark, the minister said that the Merchant Discount Rate (MDR) charge will only help banks and fintechs to invest more in infrastructure and security.
Replying to Congress leader Jairam Ramesh's suggestion that ordinary people may have to pay more to use UPI, Sitharaman said in a post on X that the UPI and Services Management Committee, led by the NPCI, is yet to decide on MDR, which will happen only after Parliament passes the Taxes and Other Laws (Amendment) Bill, 2026.
Ramesh, in a post on X, alleged that the Taxation and Other Laws (Amendment) Bill, 2026, removes the statutory guarantee that has previously kept UPI transaction fees.
"This paves the way for the imposition of a Merchant Discount Rate (MDR), which could easily be applied to all forms of digital payments in the future. The burden will ultimately fall on ordinary people, who may now have to pay for using UPI," Jayram said on X.
Recommended For You
What Minister Said
1. Merchant Discount Rate (MDR) applies only to merchants and not on the end users/customers. It will support the Banks & Fintech to invest more in infrastructure, innovation & security. All users of UPI will reap the benefits of this investment.
2. More importantly, the UPI and Services Steering Committee headed by NPCI is yet to decide on the MDR. This will happen after the Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026, which proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007.
What The Bill Has Proposed
The 2026 Taxation and other Laws (Amendment) Bill seeks to update Section 10(A) of the Payment and Settlement Systems Act, 2007, enabling the government to potentially revise the current zero-fee policy (zero-MDR) for UPI and RuPay transactions.
Notably, the Bill does not establish a new fee or MDR at this time; it only establishes the legal framework for potential future adjustments.