UPI merchant-charge debate returns after Parliament clears enabling amendments

Lok Sabha-approved changes to the Payment and Settlement Systems Act could allow charges on UPI and other notified modes. GTRI says any MDR framework should reflect operating costs and sustainability—not US trade pressure—while preserving payment-data localisation.

— Source publishedFri, 7 Aug, 2026, 08:27 IST·First seen Fri, 7 Aug, 2026, 08:28 IST·Source Financial Express · BrandWagon

What happened

Unified Payments Interface (UPI) · Lok Sabha passed amendments enabling the government to permit charges on UPI and other notified payment modes. GTRI urged

Key facts

  • Payment and Settlement Systems Act, 2007
  • Rs 3,000
  • 0.25%-0.35%
  • 2026

Why this matters

Payments partnerships and checkout-stack deals may gain strategic value if sustainable MDR returns, particularly for providers that can lower merchants’ acceptance costs while meeting data-localisation requirements.

What to watch

  • Final notification text under the amended Payment and Settlement Systems Act, including which payment modes, transaction types, merchant classes, and value thresholds can be charged.
  • Ministry of Finance, RBI, NPCI, and Department of Financial Services statements on zero-MDR policy, subsidy continuation, and permitted merchant charges.
  • Whether charges are limited to large merchants, online aggregators, high-value payments, credit-on-UPI, cross-border flows, or commercial transactions.
  • Any mandated MDR cap, prohibition on customer surcharging, tax treatment of MDR, and disclosure requirements at checkout.
  • Union Budget or supplementary allocations for UPI incentive reimbursements to banks and payment service providers.
  • Payment-app, bank-acquirer, and gateway pricing announcements; early changes in merchant onboarding, settlement fees, or value-added service bundles.
  • Merchant-association and consumer-group response, especially from small traders and quick-commerce, food-delivery, and marketplace sellers.
  • Model payment acceptance cost exposure by UPI transaction value, merchant category, store format, and acquiring partner; separate low-ticket UPI from high-ticket and commercial payments.
  • Renegotiate acquiring and payment-gateway contracts now, seeking MDR caps, volume-based rebates, service-level commitments, fraud-loss allocation, and protection against unilateral fee changes.
  • Prepare checkout and POS capability to support compliant surcharge, discount, or payment-steering rules if permitted; avoid assuming merchants can freely pass MDR to consumers.
  • Increase tender diversification across UPI apps, bank acquirers, cards, wallets, and account-to-account rails to reduce dependence on a single payment partner.
  • For small-seller marketplaces and franchise networks, create a merchant-support plan: pooled acquiring rates, settlement transparency, fee education, and working-capital support.
  • Track whether payment costs alter unit economics for low-margin categories, rapid delivery, kirana partnerships, and cash-on-delivery substitution.