Lok Sabha clears bill allowing MDR provision for specified UPI and RuPay transactions
The bill permits the government to revisit zero-MDR rules for specified UPI and RuPay payments, potentially reshaping merchant payment costs. It also extends tax incentives for foreign electronics manufacturers and component warehousing in India through FY2040-41.
What happened
Lok Sabha cleared a bill enabling the government to revise zero-MDR rules for specified UPI and RuPay transactions, while extending tax incentives for foreign
Key facts
- 2026
- 2007
- June 5
- 15-year
- FY2040-41
- 2040-41
- Rs 2,000
Why this matters
Assess partnerships or acquisitions in payment processing, merchant acquiring, and electronics supply-chain infrastructure as policy support broadens their long-term economics.
What to watch
- Finance Ministry or RBI notification defining eligible UPI/RuPay transactions, merchant thresholds, transaction-value bands, and MDR caps.
- NPCI, acquiring-bank, and payment-aggregator circulars on implementation timing and interchange/acquirer-fee allocation.
- Changes to government subsidy funding for zero-MDR UPI and RuPay transactions in the Union Budget or supplementary grants.
- Public consultation or retailer-industry lobbying focused on large-merchant versus small-merchant treatment.
- Early merchant behavior: surcharge requests, payment-routing changes, UPI incentives, or tender-mix shifts at major retail chains.
- Details of FY2040-41 electronics manufacturing and component-warehousing incentives, including eligibility for retail-linked supply chains.
- Model a 5-30 bps payment-cost exposure range by tender mix, ticket size, merchant entity, and current acquirer contracts.
- Identify stores, categories, and online channels with the highest UPI/RuPay share and assess capacity to steer customers to alternate payment rails.
- Renegotiate acquiring agreements now for MDR caps, pass-through transparency, transaction-value thresholds, and pricing review clauses.
- Prepare customer messaging and loyalty incentives that preserve UPI conversion if merchants introduce tender steering or minimum-ticket policies.
- Monitor whether foreign-electronics tax incentives improve sourcing economics for retail private-label devices, accessories, POS hardware, and consumer electronics inventory.