India plans digital-payments fee overhaul, offering potential relief for retailers
The Centre is expected to propose a framework that could exempt notified digital payment modes from bank and payment-provider charges, while clarifying merchant discount rate rules. The changes could reduce payment-cost uncertainty for Indian retailers if enacted.
What happened
Government of India · The Centre is set to propose tax and regulatory reforms, including a new framework allowing notified digital payment modes to be exempt
Key facts
- FY2040-41
- 25%
- 2026
Why this matters
The proposed framework could reshape the economics of payment partnerships, making acquiring, fintech alliances, and omnichannel checkout capabilities more strategically valuable.
What to watch
- Publication of the draft framework, notified payment modes, transaction thresholds, and effective dates.
- Whether zero-MDR treatment is extended, maintained, or modified for UPI and RuPay versus cards, wallets, and cross-border transactions.
- Rules on who bears residual processing costs: government subsidy, issuing banks, acquiring banks, networks, or payment aggregators.
- RBI, Ministry of Finance, NPCI, and Department of Financial Services guidance on MDR caps, interchange, settlement, and disclosure requirements.
- Acquirer and payment-aggregator announcements of revised gateway, platform, settlement, or device fees.
- Changes in retailer digital-payment mix, failed-payment rates, checkout conversion, and average transaction values after implementation.
- Model payment acceptance costs by rail, transaction size, and merchant format to quantify exposure under zero-MDR, capped-MDR, and cost-shift scenarios.
- Audit acquirer, gateway, wallet, and bank contracts for repricing clauses, minimum commitments, settlement fees, device rentals, and data/service charges that could replace MDR.
- Prepare a payments-routing strategy that prioritizes eligible low-cost rails while preserving redundancy across UPI, cards, wallets, and pay-later options.
- Use prospective policy clarity to renegotiate acquiring rates and demand unbundled pricing, transparent reconciliation, and service-level commitments.
- Redirect any verified savings toward conversion levers: QR/POS expansion, faster refunds, loyalty-linked payments, and digital adoption among cash-heavy customer cohorts.