The Central Government has proposed amendments to the Payment and Settlement Systems (PSS) Act that could allow Merchant Discount Rate (MDR) on selected high-value UPI transactions in the future. The proposal aims to create a legal framework for merchant charges while supporting the long-term sustainability of India's fast-growing digital payments ecosystem. It does not introduce any immediate charges, and the amendments are still under consultation.
If approved, the MDR is expected to apply only to UPI payments above ₹2,000 made to large merchants, while person-to-person transfers and payments to small businesses are likely to remain free. The government has indicated that consumers are expected to remain unaffected, with any applicable charges being borne by merchants. The final decision on the proposal, including the fee structure and implementation timeline, is yet to be announced.
