The Government has proposed changes to the law that could allow merchant charges on select UPI payments in the future. If approved, high-value transactions
above Rs 2,000 made to large businesses may be the first to attract an MDR, while consumers are likely to remain unaffected as per sources. The government introduced the Taxation and Other Laws (Amendment) Bill, 2026, which seeks to amend provisions of the Payment and Settlement Systems Act, 2007. The Government introduced the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha on Tuesday. The Bill seeks to amend provisions relating to electronic payments, potentially removing the existing legal restriction that prevents banks and payment system providers from imposing certain charges. Sources told Times Now Digital that at present there is no timeline, clear decision or framework as far as the proposal's implementation is concerned. As per estimates shared with Times Now Digital, sources suggest the Rs 2,000 floor will cover 5 percent of all UPI transactions, but those transactions account for 65 percent of the total transaction value. The move, if implemented is unlikely to impact daily purchases such as milk, vegetables and groceries, payments for auto or taxi use; such routine low-value purchases are not expected to be affected as per sources. UPI recorded 23.66 billion transactions worth around Rs 29.9 lakh crore in July, according to data from the National Payments Corporation of India (NPCI). Experts believe this could be a transformational policy change for the UPI payment structure. While no fee or structure has been approved yet, experts believe the proposal, if implemented could create a legal framework for potentially reintroducing MDR on certain UPI transactions. This is an issue that the payments industry has been pushing for to support the long-term sustainability and growth of the digital payments ecosystem.
