The Payments Council of India advocates for a merchant discount rate on UPI transactions to fund sustained investments in infrastructure amid government moves to regulate digital payment charges, challenging the zero-MDR regime since 2020.
The Payments Council of India has endorsed renewed debate over a merchant discount rate on Unified Payments Interface transactions, arguing that India’s fast-growing real-time payments network needs continuous investment to stay reliable and secure. The industry body said the system’s scale now demands sustained spending on technology, cyber security, fraud prevention and customer support.
In a post on X, the council said discussions were under way on how to fund the infrastructure that supports billions of secure transactions each month while protecting consumers and small merchants. It also said consumers would continue to use UPI free of charge and that small merchants would not be required to pay MDR for accepting UPI payments.
The comments come as the government moves to expand its authority over digital payment pricing. The Lok Sabha has passed the Taxation and Other Laws (Amendment) Bill, 2026, which changes the Payment and Settlement Systems Act, 2007 and gives the government power to decide which digital payment methods must remain free and which may attract charges. That replaces the earlier framework linked to the Income Tax Act and could open the way for MDR on UPI, which has operated under a zero-MDR regime since 2020.
According to earlier reports by Indian Express, The Economic Times, Moneycontrol and The Times of India, PCI has been lobbying for a 0.3% MDR on UPI payments by large merchants and has also sought charges on RuPay debit card transactions. The council says the aim is to align UPI and RuPay with the fee structures already applied to other digital payment instruments. UPI, launched in 2016 and backed by the National Payments Corporation of India, the Reserve Bank of India, banks and fintech firms, processed 23.65 billion transactions worth Rs 29.87 trillion in July, up from 20 billion transactions worth Rs 24.85 trillion a year earlier.
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