Finance Minister Nirmala Sitharaman Said Thursday That the Merchant Discount Rate Applies

The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, or ToLA Bill, without debate, proposing changes to the Payment and Settlement Systems Act, 2007. Once enacted, the government can notify electronic payment modes exempt from charges; others would attract MDR. Congress leader Jairam Ramesh alleged the amendment ends the legal guarantee for free UPI transactions, potentially allowing MDR on all digital payments. Sitharaman responded that MDR supports banks and fintechs in investing in infrastructure, innovation, and security, benefiting UPI users.

The UPI and Services Steering Committee, headed by NPCI, will decide on MDR after Parliament passes the bill, which amends Section 10A of the 2007 Act. She added that such issues could have been discussed in Parliament if Congress engaged constructively. MDR applies only on the merchants and not on the end users/customers.

It will support the banks & fintechs to invest more on infrastructure, innovation & security. All users of UPI will reap the benefits of this investment.