Lok Sabha Passes Bill Allowing Charges on UPI Payments

The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, on Thursday, amending the Payment and Settlement Systems Act, 2007. The legislation removes the statutory guarantee that kept Unified Payments Interface (UPI) and RuPay debit card transactions free, granting the Government of India the authority to determine which electronic payment modes remain free via notification.

Finance Minister Nirmala Sitharaman moved the bill, which allows banks and payment service providers to levy charges, including the Merchant Discount Rate (MDR). Reserve Bank of India Governor Sanjay Malhotra supported the transition to a 'user pays' model, stating that public payment infrastructure must be funded either through taxes or merchant levies.

The government asserts the bill will attract foreign capital, promote domestic electronics manufacturing, and provide process certainty for foreign cloud companies. However, the Indian National Congress criticized the move. General Secretary Jairam Ramesh alleged the amendment resulted from pressure by U.S. President Donald Trump to open the digital payments sector to American firms like Visa and MasterCard following a critical 2026 U.S. Trade Representative's report.