UPI: There is a big relief for UPI users. On August 6, Union Finance Minister Nirmala Sitharaman clarified that the implementation of the Merchant Discount Rate (MDR) would only affect merchants, with no charges imposed on regular UPI users. The Finance Minister explained that MDR would enable banks and fintech firms to invest more in infrastructure, innovation, and security, ultimately benefiting all UPI users.
No final decision on MDR has been made yet
Nirmala Sitharaman mentioned that a final decision regarding the implementation of MDR on UPI is still pending. This decision will be determined by the Services Steering Committee of UPI and the NPCI. She noted that the process will only advance if Parliament approves the Taxation and Other Laws (Amendment) Bill, 2026, which seeks to amend Section 10A of the Payment and Settlement Systems Act, 2007.
What did Congress say?
Congress leader Jairam Ramesh has asserted that the new bill would remove the legal assurance that UPI transactions are free of charge. He warned that this could lead to the imposition of MDR on all UPI transactions in the future, ultimately burdening customers. He stated that ordinary people might have to pay a fee to use UPI in the future.
The Finance Minister called this claim false.
Nirmala Sitharaman dismissed the allegations from Congress as misleading. She emphasized that such matters should be discussed constructively in Parliament rather than spreading misinformation. According to her, no decision has been made at this point to impose any fees on UPI users.
What did the RBI Governor say?
The discussion surrounding MDR on UPI gained momentum following a recent statement from RBI Governor Sanjay Malhotra, who noted that operating a digital payment system incurs costs, and someone will need to shoulder that burden. However, he did not specify who would be responsible for it.As before, ordinary users will be able to make payments above Rs 2,000 without charge. The standard UPI limit is Rs 1 lakh per day. However, hospital, tax, and education payments are exempt.
This decision was originally scheduled to take effect in 2020, but to promote digital payments, the government prohibited banks and payment service providers from charging MDR on UPI and RuPay debit card transactions. More details will be revealed in the coming days.