"Parliament Bill proposes UPI transaction fees amid US digital trade pressure"
Merchant Discount Rate (MDR)
fee charged by a merchant's bank for processing a digital or card payment transaction
NPCI (National Payments Corporation of India)
RBI-promoted not-for-profit entity that owns and operates UPI and RuPay
India's digital payments ecosystem is anchored by the Unified Payments Interface (UPI), launched in 2016 by the National Payments Corporation of India (NPCI) — a not-for-profit entity promoted by the Reserve Bank of India and a consortium of banks. UPI operates as an interoperable, real-time payment rail that allows fund transfers across bank accounts without requiring a card or point-of-sale terminal. Its adoption was accelerated by the demonetisation episode, the COVID-19 pandemic's push toward contactless transactions, and — crucially — its zero Merchant Discount Rate (MDR) structure, which means merchants pay no fee for accepting UPI payments. The Payment and Settlement Systems Act, 2007 provides the overarching statutory framework for payment systems in India, and Section 10A of that Act is the specific provision the proposed Taxation and Other Laws (Amendment) Bill, 2026 seeks to amend to permit levy of fees on UPI and RuPay debit card transactions.
RuPay, also operated by NPCI, is India's domestic card network — a direct competitor to the US-headquartered Visa and Mastercard duopoly. Government policy has actively promoted RuPay through Jan Dhan accounts, preferential treatment in public procurement, and early integration with UPI's credit-card rails. This policy architecture has delivered financial inclusion dividends — hundreds of millions of previously unbanked citizens now transact digitally — but it has simultaneously displaced fee revenue that Visa and Mastercard would otherwise have earned from card-based transactions in one of the world's fastest-growing consumer markets.
The Merchant Discount Rate (MDR) is the fee a merchant's bank charges for processing a card or digital payment transaction; it is typically shared among the acquiring bank, the issuing bank, and the card network. For credit cards and non-RuPay debit cards, MDR ranges from roughly 0.4% to 2% of transaction value. The government waived MDR on UPI and RuPay debit card transactions to incentivise adoption, compensating banks through a budgetary reimbursement mechanism. The proposed Bill would amend Section 10A of the Payment and Settlement Systems Act, 2007 to remove the statutory bar on charging fees for these transactions — effectively opening the door for banks and payment system operators to levy MDR on UPI and RuPay payments, though the government has clarified that any such charge would apply to merchants, not end consumers. …
With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic?
Which of the following activities constitute real sector in the economy?
1.Farmers harvesting their crops
2.Textile mills converting raw cotton into fabrics
3.A commercial bank lending money to a trading company
4.A corporate body issuing Rupee Denominated Bonds overseas
Select the correct answer using the code given below:
Which of the following best describes the 'Merchant Discount Rate (MDR)' in the context of digital payments?
Consider the following pairs:
Country — Domestic instant payment platform
1.India — UPI (Unified Payments Interface)
2.Brazil — Pix
3.United States — RuPay
How many of the above pairs are correctly matched?
With reference to Section 301 of the US Trade Act of 1974, which of the following statements is/are correct?
1.It allows the US government to investigate and impose retaliatory tariffs on countries whose trade practices are deemed discriminatory or burdensome to US commerce.
2.It has been invoked against Brazil citing the preferential treatment given to the Pix instant payment platform.
3.It can only be applied to goods trade and not to digital services or payment systems.
Assertion (A): The United States Trade Representative has classified India's zero-MDR policy on UPI and preferential promotion of RuPay as foreign trade barriers.
Reason (R): US payment companies Visa and Mastercard operate under a fee-based model where card networks, acquiring banks, and issuing banks share merchant discount revenue, which zero-MDR platforms structurally displace.
Which one of the following is correct in respect of the above?
Want the full note, Prelims Facts & MCQ answers?
Create a free account — takes less than a minute.
Create free account