Govt Opens Door to MDR On UPI, To Amend Digital Payment Rules

In what could likely pave the way for the reintroduction of the merchant discount rate (MDR) on UPI payments, the Union government has proposed amendments to the Payment and Settlement Systems Act (PSSA), 2007. Clubbed under the Taxation And Other Laws (Amendment) Bill, 2026, the proposed rules aim to amend the Section 10A of the 2007 Act. The section specifically bars banks and system providers from “directly or indirectly” imposing a charge on UPI payments.