Says vast majority of transactions to remain free for merchants as well
NEW DELHI, AUG 8 (PTI): The government on Saturday categorically stated that consumers and small merchants will continue to enjoy free Unified Payments Interface (UPI) services to allay fears regarding the levy of charges on such transactions following the passage of a Bill to amend the Payment and Settlement Systems Act, 2007.
However, nominal Merchant Discount Rate (MDR) for merchants will be applicable as and when charges are introduced.
“They will apply only to a limited set of merchant transactions, above a certain threshold, at a nominal rate, far lower than debit or credit card MDRs,” the finance ministry said in a statement.
The statement comes two days after Lok Sabha passed a Bill to amend the Payment and Settlement Systems Act (PSS Act), 2007, which authorises the government to permit banks and other service providers to levy charges on payments through UPI and other notified electronic payment modes. “Once 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, the ‘UPI and Services Steering Committee’ headed by NPCI will decide on the MDR, if any,” it said.
The recent amendment to the PSS Act has generated a debate, with some misinterpreting it as a move to impose charges on ordinary users, it said, adding, in reality, the amendment is an enabling provision designed to ensure UPI’s long-term sustainability, technological advancement, and resilience against emerging risks.