India finance minister says MDR will apply to merchants

Finance Minister Nirmala Sitharaman has clarified that any future Merchant Discount Rate (MDR) on digital transactions like UPI and RuPay would apply only to merchants, not to end customers. The clarification, issued via social media on August 6, came amid a political dispute following the passage of the Taxation and Other Laws Amendment Bill, 2026, by Parliament.

Sitharaman stated that an MDR would support banks and financial technology companies in investing more in payment infrastructure, innovation, and security. She argued that all users of the Unified Payments Interface (UPI) would benefit from these investments through a stronger and more secure digital payments ecosystem. The minister emphasized that no decision on implementing an MDR has been made, noting that a steering committee headed by the National Payments Corporation of India (NPCI) will deliberate on the matter only after the bill becomes law.

The bill proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007. It does not introduce an MDR or specify any charges. Instead, it provides a legal framework that would allow the government to modify the existing zero-MDR policy for specified payment...