India passes UPI MDR bill
Analysis based on 79 articles · First reported Aug 06, 2026 · Last updated Aug 18, 2026
The passage of the bill introduces potential future MDR charges on UPI transactions, which could increase costs for merchants and payment service providers, potentially affecting fintech companies and banks. The uncertainty and political controversy may create short-term volatility in Indian digital payment stocks, while the clarification that MDR applies only to merchants may limit direct impact on consumers.
On August 6, 2026, the India — Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, which amends the Payment and Settlement Systems Act, 2007, to authorize the India — India to permit banks and payment service providers to levy Merchant Discount Rate (MDR) charges on UPI and other notified electronic payment modes. The amendment removes the existing statutory bar on such charges, but does not impose any fees immediately; the government will decide via notification which payment modes remain free. Finance Minister Nirmala Sitharaman clarified that MDR applies only to merchants, not end users, and that the UPI and Services Steering Committee headed by NPCI has yet to decide on the rate. RBI Governor Sanjay Malhotra said it is premature to discuss MDR, but emphasized that someone must pay for the public infrastructure. The bill was passed without debate amid opposition protests. The Congress party, led by Jairam Ramesh, criticized the move, alleging it follows US pressure from President Donald Trump and the USTR's 2026 report criticizing UPI and RuPay for being free. Think tank GTRI, led by Ajay Srivastava, urged India not to rewrite UPI policies under US pressure and suggested alternative funding models. The bill also aims to attract foreign capital and promote domestic electronics manufacturing.
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