India's Parliament Passes Bill Enabling MDR on UPI Payments

India's lower house of Parliament, the Lok Sabha, passed a bill on Thursday that amends the Payment and Settlement Systems Act, 2007. This legislative move paves the way for the central government to introduce Merchant Discount Rate (MDR) charges on transactions made via the Unified Payments Interface (UPI).

Finance Minister Nirmala Sitharaman introduced the bill, which is now set to be proposed in the Rajya Sabha, the upper house of Parliament. The amendment specifically targets the legal framework surrounding digital payment systems.

Minister Sitharaman stated that the MDR will apply only to merchants, not to end-users or customers. On social media, she explained that the charges would support banks and fintech companies in investing further in infrastructure, innovation, and security, ultimately benefiting all UPI users.

While the final decision on the MDR amount and implementation rests with the NPCI (National Payments Corporation of India), reports suggest a potential charge of 0.25% to 0.4% on UPI transactions exceeding ₹2,000 made to businesses. Person-to-person transactions are expected to remain exempt.