Somebody must bear the cost of UPI transactions: RBI guv

Reserve Bank governor Sanjay Malhotra has said it is too early to determine who would bear the cost if the government permits a merchant discount rates (MDR) on some unified payments interface (UPI) transactions.

MDR is a fee paid by a merchant to the bank or payment service provider processing a digital transaction. By definition it is not a charge levied directly on the customer making the payment or the one receiving it.

The governor’s comments come a day after finance minister Nirmala Sitharaman introduced the Taxation and Other Laws (Amendment) Bill, 2026, that seeks to give the Centre greater discretion to decide which electronic payment modes must remain free of charges or not.