Lok Sabha passes Bill to allow fees on UPI and other electronic payments

Why in news

The Lok Sabha passed a Bill to amend the Payment and Settlement Systems Act, 2007, to allow banks and providers to levy fees on UPI and electronic payments.

Background

The Bill amends the Payment and Settlement Systems Act, 2007. It removes the current exemption of UPI transactions from Merchant Discount Rate (MDR) charges to create a sustainable revenue model for payment providers.

Facts for Prelims

• Act / BillPayment and Settlement Systems Act, 2007: Governs the framework for electronic payment systems in India.
• FactMDR (Merchant Discount Rate): A fee paid by a merchant to a bank or payment processor for processing a transaction.
• BodyLok Sabha: The lower house of the Parliament of India passed the bill via voice vote.

For Mains

Q. Discuss the implications of removing MDR exemptions on UPI for the growth of the digital economy and the sustainability of the fintech ecosystem in India.

Dimensions to cover in your answer

• sustainability of payment providers
• impact on merchant costs
• digital inclusion vs. transaction costs
• monetary stability

Keywords: Merchant Discount Rate (MDR) · Digital Infrastructure · Sustainable Revenue Model · Fintech Ecosystem · Payment Settlement Systems

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