Selective UPI MDR Will Need Reliable Merchant Intelligence, Not Just a Pricing Rule
The article discusses the implementation challenges of a potential selective Merchant Discount Rate (MDR) framework for UPI payments in India. It emphasizes that accurate merchant verification and classification are essential for any fair pricing policy.
Why it matters
As India reconsiders UPI transaction fees, the technical ability to distinguish between merchant types is critical to maintaining the ecosystem's growth and fairness.
As India reopens the UPI economics debate, the implementation challenge will be identifying, classifying and treating merchants fairly
BANGALORE, India , Aug. 21, 2026 /PRNewswire/ -- At CARD91, we believe the UPI MDR debate must go beyond pricing. Any selective framework will require accurate merchant verification, consistent classification and ongoing risk visibility to protect legitimate businesses and ensure fair implementation.
The passage of the Taxation and Other Laws (Amendment) Bill, 2026 has reopened the industry discussion around the Merchant Discount Rate, or MDR, on UPI transactions.
The amendment creates a legal pathway under which the existing zero-MDR structure may be modified for specified digital payment transactions. However, the Government has clarified that no immediate charge has been introduced. Consumers and person-to-person payments will remain free, small merchants will remain protected, and no final MDR framework has been announced.
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