Merchant charges for UPI soon? LS passes Bill allowing banks to levy fees

In a step closer to possibly introducing Merchant Discount Rate (MDR) on UPI transactions, the Lok Sabha on Thursday approved a Bill amending the Payment and Settlement Systems Act, 2007.This empowers the government to allow banks and other payment service providers to impose charges on transactions conducted through the unified payments interface (UPI) and other electronic payment modes that may be notified.The amendment, cleared by the House without any discussion amid repeated disruptions, removes the existing legal restriction that bars banks and payment service providers from collecting MDR on notified electronic payment modes.What the Bill means for UPI transactionsAccording to a PTI report, through this move, the government intends to create a framework under which consumers and small businesses pay a nominal fee for digital payment services while ensuring banks, payment service providers (PSPs) and payment infrastructure companies that support the digital payments ecosystem have a sustainable source of revenue.The…