India passes amendment to permit future digital payment fees

The Indian government has introduced a legislative amendment that could pave the way for transaction charges on popular digital payment methods, including the Unified Payments Interface (UPI) and RuPay debit cards, though officials stress no immediate changes are planned. The proposed change, tabled by Finance Minister Nirmala Sitharaman on August 4, 2026, would amend the Payment and Settlement Systems Act, 2007, by removing a key provision that currently prohibits banks and payment system providers from imposing charges on these notified electronic payment modes.

The Lok Sabha passed the bill on August 6, 2026. The amendment targets Section 10A of the act, which was introduced in 2019 to promote digital payments by ensuring transactions through specified modes like UPI remained free of a Merchant Discount Rate (MDR). MDR is a fee, typically a percentage of the transaction value, paid by merchants to banks and payment processors for accepting digital payments. The proposed removal of this statutory safeguard would grant the government greater flexibility to decide, through future executive notifications rather than fresh legislation, which payment methods could be subject to...