Proposed PSS Act change could pave way for MDR on select UPI merchant payments
A proposed amendment to the Payments and Settlement Systems Act would enable future MDR charges on selected UPI transactions. No fee change is immediate: charges would require parliamentary approval and subsequent government or RBI notifications, while consumers would remain exempt.
What happened
The government has proposed amending the PSS Act to enable future MDR charges on selected UPI transactions. Retailers, especially large merchants, could face
Key facts
- UPI processed 23.66 billion transactions worth ₹29.88 trillion ($313.47 billion) in July 2026
- Fintech industry FY25 revenue: ₹1.03 trillion
- Aggregate payments-sector loss in FY25: ₹5,300 crore
- Potential MDR threshold discussed: transactions above ₹2,000
- Example UPI retail purchase: ₹30,000 television
Why this matters
Reassess payments partnerships and fintech targets for exposure to a future merchant-discount-rate regime, particularly among platforms serving large retailers and transactions above the reported ₹2,000 threshold.