3 weeks ago
Sitharaman clarifies UPI charges apply to merchants, not customers
UPI is a popular way for people in India to send and receive money using their phones.
Some people became worried that using UPI would soon cost them money.
India's Finance Minister, Nirmala Sitharaman, said that is not true for regular users.
She said any new fee, called a Merchant Discount Rate, would be paid only by shops and businesses that accept UPI payments.
That money would help banks and payment companies invest in better infrastructure and security.
A committee led by the National Payments Corporation of India will decide whether any such fee is needed, and only after a new law is passed.
India's Parliament, the Lok Sabha, has passed a bill that gives the government more power to decide which payment methods can charge fees.
The Bill itself does not introduce any charges on UPI or RuPay payments.
A think tank called GTRI warned that India should not change its UPI rules because of pressure from the United States.
For now, ordinary people using UPI should not pay anything extra.
Finance Minister Nirmala Sitharaman clarified that any future merchant discount rate (MDR) on UPI would apply to merchants, not customers.
She said MDR revenue would support banks and fintech firms in investing more in infrastructure, innovation, and security.
The UPI and Services Steering Committee, headed by NPCI, has not yet decided on MDR and will consider it only after the Taxation and Other Laws (Amendment) Bill, 2026 is enacted.
The Lok Sabha passed a bill amending Section 10A of the Payment and Settlement Systems Act, 2007, empowering the government to notify which electronic payment modes remain free of charges.
Congress leader Jairam Ramesh alleged the burden would ultimately fall on ordinary people, while think tank GTRI warned India must not rewrite UPI policies under US pressure.
- Who
- Finance Minister Nirmala Sitharaman, Congress leader Jairam Ramesh, the NPCI-headed UPI and Services Steering Committee, and think tank GTRI.
- What
- Sitharaman clarified that any future MDR on UPI applies to merchants, not customers, as the Lok Sabha passed a bill amending the Payment and Settlement Systems Act, 2007.
- Where
- India — Parliament (Lok Sabha and Rajya Sabha) and in posts on X (formerly Twitter).
- When
- August 6-7, 2026, during Parliament's Monsoon Session, which began on July 20, 2026.
- Why
- To counter claims that UPI users would be charged and to create a legal framework for potentially revising the zero-MDR policy.
Critics — Congress & GTRI
Government — FM Sitharaman
MDR on UPI transactions
Critics — Congress & GTRI
Congress leader Jairam Ramesh alleged the proposed legal changes could eventually burden UPI users, arguing that even if MDR is levied on merchants, the cost would ultimately be passed on to consumers.
Government — FM Sitharaman
Sitharaman said MDR applies only to merchants, never to end users/customers, and would fund better infrastructure, innovation and security for all UPI users.
Revising the zero-MDR UPI policy
Critics — Congress & GTRI
Think tank GTRI said India must not rewrite UPI policies under US pressure and should defend competition, policy autonomy and the long-term sustainability of its payments ecosystem, noting zero MDR helped consumers, small shops and roadside vendors.
Government — FM Sitharaman
The government said the Bill only creates a legal framework to notify which electronic payment modes stay free, and the NPCI-headed steering committee will decide on MDR only after the legislation is enacted.
Financial sustainability of UPI
Critics — Congress & GTRI
Ramesh rejected the government's position that introducing MDR is necessary to make the UPI ecosystem financially sustainable, describing the argument as 'entirely wrong.'
Government — FM Sitharaman
Sitharaman said MDR revenue would support banks and fintech companies in investing more in infrastructure, innovation and security, strengthening India's digital payments ecosystem.
Key facts
- Finance Minister
- Nirmala Sitharaman
- MDR applies to
- Merchants only, not customers
- Decision body
- UPI and Services Steering Committee (headed by NPCI)
- Bill
- Taxation and Other Laws (Amendment) Bill, 2026
- Law to be amended
- Section 10A, Payment and Settlement Systems Act, 2007
- Lok Sabha passage
- Thursday, August 6, 2026
- Current policy
- Zero MDR on UPI and RuPay debit card transactions
- Reuters-reported proposal
- MDR of 0.3%-0.5% on UPI transactions above Rs 2,000 for merchants with turnover above Rs 1.5 crore
Quotes
Finance Minister Nirmala Sitharaman
Indian Finance Minister, responsible for monetary policy and payment systems
“"Before spreading a canard, @Jairam_Ramesh ji, please consider this: Merchant Discount Rate (MDR) applies only on the merchants and not on the end users/customers. It will support the Banks & Fintech to invest more on infrastructure, innovation & security. All users of UPI will reap the benefits of this investment."”
news18.com
telegraphindia.com
wionews.com
Sources
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