UPI MDR Charges | New Delhi / Hyderabad, August 7: Union Finance Minister Nirmala Sitharaman clarified that the proposed Merchant Discount Rate (MDR) on digital transactions will apply only to merchants and not to customers, asserting that UPI users will continue to benefit from a stronger and more secure digital payments ecosystem.
The clarification came after Congress leader Jairam Ramesh alleged that ordinary people could end up paying more for using the Unified Payments Interface (UPI).
Sitharaman said the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), is yet to take a decision on the MDR framework.
She added that the committee will deliberate on the matter only after Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026.
UPI MDR Charges | Government Says Customers Will Not Pay MDR
Responding to Ramesh’s criticism on social media platform X, Sitharaman said the MDR is levied on merchants rather than end users.
She said the fee would help banks and fintech companies invest more in payment infrastructure, innovation, and cybersecurity, ultimately benefiting all UPI users through a safer and more efficient digital payment system.
The Finance Minister also criticised the Congress for disrupting Parliament during the ongoing Monsoon Session, saying the proposed legislation could have been discussed if the Opposition had participated constructively in parliamentary proceedings.
The Taxation and Other Laws (Amendment) Bill, 2026, proposes amendments to Section 10(A) of the Payment and Settlement Systems Act, 2007.
The amendment would empower the Central Government to notify which electronic payment modes or categories of transactions should remain exempt from MDR.
The Bill does not impose any MDR or specify charges. Instead, it provides the legal framework that would allow the government to modify the existing zero MDR policy for UPI and RuPay card transactions through future notifications.
Earlier, Jairam Ramesh claimed that the government’s argument that MDR is necessary to make UPI financially sustainable was “entirely wrong” and alleged that the burden would eventually fall on ordinary citizens.
The debate over MDR has intensified following the introduction of the amendment Bill, with stakeholders from the banking, fintech, and digital payments sectors closely watching the government’s next move.
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