A proposal to introduce a Merchant Discount Rate (MDR) for transactions via the Unified Payments Interface (UPI) was recently introduced in parliament, sparking active debates. Congress and one trade organization are opposing this proposal.
According to one survey, the introduction of such fees could lead to a decrease in UPI payments in India by more than 50 percent. Against this backdrop, Ashnir Grover, former co-founder of BharatPe, issued a warning that such charges could harm UPI—India's largest digital success story.
In response to circulating rumors about UPI, Finance Minister Nirmala Sitharaman clarified that if an MDR is introduced in the future, the payment of these fees will fall on traders, not consumers.
Following Sitharaman's clarifications, Grover wrote on social media platform X, calling the introduction of MDR on UPI transactions a 'backward step.' He stated that any MDR on UPI would destroy the one thing that works smoothly like clockwork, meaning mobile payments would disappear. He urged the government to reconsider this issue.
His comment came after the passage of the Taxation and Other Laws (Amendment) Bill, 2026, in the Lok Sabha, which amends the Payment and Settlement Systems Act, 2007. This bill does not impose immediate charges for UPI transactions but creates a legal framework allowing the center to make changes to the existing zero MDR system through future notifications. This means the government can introduce an MDR fee for UPI payments in the future under this law.
The government emphasized that if an MDR is introduced in the future, ordinary UPI users will not face it, as the charge will apply exclusively to sellers, i.e., merchants. Finance Minister Nirmala Sitharaman noted that this will help banks and fintech companies invest more in infrastructure, innovation, and security, and all UPI users will benefit from these investments.
Sitharaman specified that MDR has not yet been introduced and no final decision has been made regarding its implementation. According to her, the issue will only be considered after the Taxation and Other Laws (Amendment) Bill, 2026, is passed by parliament and after a decision is made by the UPI Operations Committee, chaired by the National Payments Corporation of India (NPCI).

