MDR on UPI applies to merchants, not customers: Nirmala Sitharaman
What's the story
Finance Minister Nirmala Sitharaman has clarified that the Merchant Discount Rate (MDR) on digital transactions applies to merchants, not customers. The clarification comes amid concerns raised by Congress leader Jairam Ramesh over potential costs for ordinary people using Unified Payments Interface (UPI). Sitharaman emphasized that the MDR charge would help banks and fintech companies invest more in infrastructure and security.
Clarification issued
'All users of UPI will reap benefits'
In a post on X, Sitharaman said, "Merchant Discount Rate (MDR) applies only to merchants and not to end users/customers."
She added that it would enable banks and fintechs to invest more in infrastructure, innovation, and security.
"All users of UPI will reap the benefits of this investment," she noted.
Decision pending
Committee to decide on MDR after passing of bill
Sitharaman also said that a committee will decide on the MDR after Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026.
The bill proposes amending Section 10(A) of the Payment and Settlement Systems Act, 2007. It would give legal backing to modify the zero-MDR framework for UPI and RuPay card transactions.
Legal framework
What does bill say?
The Taxation and Other Laws (Amendment) Bill, 2026, doesn't introduce an MDR or prescribe a fee on UPI or RuPay transactions.
It only provides the legal framework for the government to amend the zero-MDR policy in the future.
This move is aimed at keeping UPI and RuPay card transactions financially sustainable while ensuring continued investment in infrastructure and security by banks and fintech companies.