Lok Sabha passed a bill amending the Payment and Settlement Systems Act 2007, allowing banks and other service providers to charge users on UPI and other electronic payment modes. Currently, banks and payment‑system providers cannot charge users for UPI or RuPay debit card transactions. Zero merchant discount rate (MDR) has helped the system grow by letting consumers, small shops and roadside vendors transact without fees.
GTRI pointed out that banks, NPCI and payment companies must invest in cybersecurity, fraud prevention, servers, dispute resolution and system expansion. A sustainable funding model is needed, but it need not come from a blanket merchant charge. The think tank suggested targeted budget support, government incentives, fees on large commercial transactions, cross‑subsidisation and narrow fees for high‑turnover merchants.
The bill comes amid U.S. criticism of India’s digital‑payment framework. The U.S. Trade Representative’s 2026 National Trade Estimate Report criticised both Brazil’s Pix and India’s UPI and RuPay system. GTRI founder Ajay Srivastava warned that India should not rewrite its UPI rules under U.S. pressure and must defend competition, policy autonomy and the ecosystem’s long‑term sustainability.
GTRI also stressed the importance of keeping payment‑data localisation rules intact. Payment data are sensitive and commercially valuable, and keeping them in India helps regulators investigate fraud, improve cybersecurity and protect national security. India should not introduce MDR merely to appease U.S. trade complaints or protect the profits of foreign card companies.
Any decision on charging users should be based on the cost of running UPI and ensuring its long‑term sustainability. American companies already enjoy broad access to India’s payment market, so the focus must remain on self‑sufficiency and robust infrastructure.