Finance minister Nirmala Sitharaman on Thursday pushed back Congress leader Jairam Ramesh’s claims that ordinary people could end up paying more for using the Unified Payments Interface (UPI), clarifying that any Merchant Discount Rate (MDR) on digital transactions would be levied on merchants and not on customers.Responding to Ramesh on social media platform X, Sitharaman said that the purpose of the MDR is to strengthen the digital payments ecosystem by enabling banks and fintech firms to invest in infrastructure, innovation and security.“Before spreading a canard, @Jairam_Ramesh ji, please consider this: Merchant Discount Rate (MDR) applies only on the merchants and not on the end users/customers. It will support the Banks & Fintech to invest more on infrastructure, innovation & security. All users of UPI will reap the benefits of this investment.”
Panel to consider MDR after Bill is passed
The finance minister also clarified that no decision has yet been taken on introducing an MDR on UPI transactions. She said the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), will examine the matter only after Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026.The proposed legislation empowers the central government to notify which electronic payment modes or transactions will continue to remain free.Sitharaman said the committee’s deliberations on the merchant fee would take place only after the Bill receives parliamentary approval.The exchange followed a post by Jairam Ramesh, who argued that the burden of the Merchant Discount Rate would ultimately be borne by ordinary people. He also said the government’s contention that such a charge is the only way to make UPI financially sustainable is “entirely wrong”.Sitharaman rejected the assertion, maintaining that customers would not be required to pay the merchant fee.
FM links delay in debate to Parliament disruptions
Sitharaman also criticised the opposition over repeated disruptions during the ongoing Monsoon session of Parliament, saying the proposed legislation could have been debated if proceedings had not been stalled.Referring to the disruptions in both the Lok Sabha and the Rajya Sabha since the Monsoon session began on July 20, she said, “could have been discussed on the floor of the House if your party @INCIndia engages constructively in Parliament when the Bill was/is tabled. (LS/RS respectively)”.The Taxation and Other Laws (Amendment) Bill, 2026 proposes an amendment to Section 10(A) of the Payment and Settlement Systems Act, 2007, giving the central government the legal authority to modify the existing zero-MDR framework for UPI and RuPay card transactions.The Bill itself does not introduce a Merchant Discount Rate or prescribe any fee. Instead, it creates the legal framework under which the government may decide to modify the current zero-MDR regime through a notification at a later stage.
