India moves to reintroduce merchant fees on UPI digital payments
The Indian government has tabled an amendment to the Payment and Settlement Systems Act as part of the Taxation and Other Laws (Amendment) Bill 2026. The change would let the centre directly notify which electronic payment modes remain exempt from a merchant discount rate (MDR), opening the way to reimpose MDR on UPI after six years of a zero‑fee regime. Finance Minister Nirmala Sitharaman presented the proposal in parliament. Industry officials say the lack of merchant fees limits investment in the digital payments ecosystem.
UPI processed 23.6 billion transactions worth 29.9 trillion rupees (about $313.5 billion) in July, with PhonePe and Google Pay dominating the market. Two fee structures are being examined: an MDR of 0.3 % to 0.5 % on transactions above ₹2,000 for merchants whose annual turnover exceeds ₹15 million, or a turnover‑based charge applied only to large merchants. No final decision on the fee level or scope has been made.
Entities: Google Pay · Indian Government · Nirmala Sitharaman · Payment and Settlement Systems Act · PhonePe · Pine Labs · Taxation and Other Laws (Amendment) Bill 2026 · Unified Payments Interface · Unified Payments Interface (UPI)
Claims
What the coverage asserts, and how well corroborated each claim is across sources.
- [● 2 SOURCES] The amendment would allow the centre to notify which electronic payment modes are exempt from merchant discount rate (MDR) charges. (6e88be62-55a8-41fa-a151-de5e764f3c2e, dac9ad26-1bd0-4e12-b4cf-f733d76d891f)
- [● 2 SOURCES] Industry executives argue that the lack of merchant fees hampers investment in the digital payments ecosystem. (cdb5d271-df6e-45d1-9a5e-c706009b3d58, 30dda5c7-ca1f-47cf-a351-0097c38f0a76)
- [● 3 SOURCES] Proposals consider imposing an MDR of 0.3 % to 0.5 % on transactions above ₹2,000 for merchants with annual turnover exceeding ₹15 million. (cdb5d271-df6e-45d1-9a5e-c706009b3d58, 30dda5c7-ca1f-47cf-a351-0097c38f0a76, 6e88be62-55a8-41fa-a151-de5e764f3c2e)
- [● 2 SOURCES] UPI currently operates under a zero‑MDR regime, meaning merchants pay no fee for UPI transactions. (cdb5d271-df6e-45d1-9a5e-c706009b3d58, 30dda5c7-ca1f-47cf-a351-0097c38f0a76)
- [● 2 SOURCES] No decision has yet been made on the level of fees or which merchants will be charged. (cdb5d271-df6e-45d1-9a5e-c706009b3d58, 30dda5c7-ca1f-47cf-a351-0097c38f0a76)
- [● 4 SOURCES] The Indian government introduced an amendment to the Payment and Settlement Systems Act via the Taxation and Other Laws (Amendment) Bill 2026. (cdb5d271-df6e-45d1-9a5e-c706009b3d58, 30dda5c7-ca1f-47cf-a351-0097c38f0a76, dac9ad26-1bd0-4e12-b4cf-f733d76d891f, 6e88be)
- [● 2 SOURCES] Finance Minister Nirmala Sitharaman tabled the amendment in parliament. (cdb5d271-df6e-45d1-9a5e-c706009b3d58, 30dda5c7-ca1f-47cf-a351-0097c38f0a76)
- [● 2 SOURCES] UPI processed 23.6 billion transactions worth 29.9 trillion rupees ($313.5 billion) in July. (cdb5d271-df6e-45d1-9a5e-c706009b3d58, 30dda5c7-ca1f-47cf-a351-0097c38f0a76)