Synopsis
A groundbreaking bill has been introduced that permits merchant discount rates on UPI transactions. This innovative change aims to enhance the future development of the digital payments ecosystem. Notably, most small transactions under ₹2000 will remain free from these fees, while larger amounts will contribute to value-added credit services and international connections, ensuring UPI’s sustainability and global competitiveness.
Taxation and Other Laws (Amendment) Bill 2026, passed by the Lok Sabha on Thursday, sets out the legal basis for UPI transactions to allow a merchant discount rate (MDR), a processing fee merchants pay to banks for transactions. In the absence of this provision, there was no scope to introduce transaction fees on the platform, which are vital for the development of the digital instant payments system. Over 95% of UPI transactions conducted are for less than ₹2,000, and are likely to remain exempt. The remaining, which account for more than 2/3rd of UPI transaction value, could benefit from the introduction of MDR by enabling the growth of value-added credit services. This is the next stage in the growth of any digital payments platform, and UPI should not surrender its enormous early lead to potential rivals in the pipeline.
This requires transparent and competitive pricing of transactions conducted over UPI. The scale of UPI allows banks to operate at low MDR levels compared with credit card networks. So, its intrinsic advantage is unlikely to be lost. Since UPI will have to link up with an international network of digital payments platforms – most of which charge fees – to facilitate cross-border transactions, a cap on MDR will create an effective moat. Additional revenue streams from credit services will also act as a drag on transaction fees. In its next avatar, UPI will have to compete on costs and services. The Bill just passed addresses both emerging realities while preserving the core strength of UPI by being free for small-ticket transactions.
The timing of the legal change is important, because around 100 countries have deployed, or are developing, their own instant payments platforms. It is time India switched to the majority approach of these platforms being built and managed through transaction fees, while holding on to the benefits of UPI’s publicly funded digital infrastructure legacy, and ensuring its long-term financial sustainability and global competitiveness.
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No fear or favour, a uniform legal code
ET BureauLast Updated: Aug 06, 2026, 11:02:33 PM IST
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Synopsis
West Bengal’s initiative to enforce noise pollution regulations showcases a commendable standard of civic discipline. This enforcement serves as a vital reminder that laws are to be upheld rather than treated as optional guidelines. Such necessary measures should inspire similar actions throughout the nation. While religious freedom is important, it should never intrude upon the tranquility of others. Uniform law application is crucial for reinstating civic harmony across the country.
West Bengal government has struck a refreshing note of civic discipline. By replacing loudspeakers that breached noise-pollution norms, they have reminded citizens that the law is not a suggestion but a standard. In a country where decibel excess has been normalised – from azaans and jaagrans to political rallies that weaponise sound – this enforcement was overdue, and is welcome. Such a move must be emulated across the country without fear or favour.
The principle here is not anti-religious. On the contrary, it is pro-rights. The Supreme Court has long held that freedom of religion does not extend to disturbing others’ peace. Yet, across India, many religious rituals routinely flout exactly that, emboldened by political indulgence and the fear of offending ‘sentiment’. The result is a culture where illegality or flouting rules masquerades as tradition, whether it’s polluting rivers by immersions, or setting up encroachments in the name of shrines. A pushback on this kind of ‘normalisation’ is not confined to religion, never mind a religion, but to civil society at large. The law must be applied uniformly – a uniform legal code, if you will. Processions that hijack public roads and make windows shake, and rallies that destroy the peace, especially of the elderly, the sick and animals, need to be unhitched from ‘tradition’.
Noise pollution is only one example of India’s tolerance for ‘normalised’ infractions. Traffic violations, firework excesses, wayward garbage disposal… the list is long, the task is challenging. To restore civic order, enforcement must be consistent and community-agnostic. Let India’s states ensure that the law is not drowned out by the loudest voice, but amplified by fairness, and the regularly dismissed rule of law.
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