New Delhi: India should safeguard the independence of its digital payments framework and avoid making policy changes under external pressure, economic think tank GTRI said on Thursday. The remarks came after the Lok Sabha approved amendments to the Payment and Settlement Systems Act, 2007, enabling the government to authorise banks and other payment service providers to levy charges on transactions made through the Unified Payments Interface (UPI) and other notified electronic payment systems.
According to GTRI, the existing framework does not permit banks or payment system operators to impose direct or indirect charges on users for transactions conducted through UPI or RuPay debit cards. The zero Merchant Discount Rate (MDR) policy has played a pivotal role in expanding digital payments across the country by making transactions cost free for consumers as well as small businesses, including neighbourhood stores and street vendors.
The think tank, however, acknowledged that maintaining a robust digital payment ecosystem requires significant financial investment. Banks, the National Payments Corporation of India (NPCI) and fintech companies continue to spend heavily on cybersecurity infrastructure, fraud detection, dispute management, server capacity and technology upgrades to ensure seamless services.
GTRI suggested that the need for sustainable funding should not automatically translate into a universal transaction fee for merchants. Instead, it proposed alternative mechanisms such as targeted government support, financial incentives, selective charges on high-value commercial transactions, cross-subsidisation through other financial services and carefully designed fees applicable only to large merchants with substantial transaction volumes.
The organisation also linked the legislative changes to growing international scrutiny of India’s digital payments ecosystem. It pointed out that the US Trade Representative’s 2026 National Trade Estimate Report on Foreign Trade Barriers criticised India’s UPI and RuPay platforms, along with Brazil’s Pix payment system.
GTRI Founder Ajay Srivastava argued that India should frame its digital payment policies based on domestic priorities rather than external trade concerns. He stressed that preserving competition, regulatory independence and the long-term stability of the country’s payment infrastructure should remain central to policy decisions.
Srivastava also emphasised the importance of retaining India’s payment data localisation requirements, stating that storing transaction data within the country strengthens fraud investigations, enhances cybersecurity capabilities and supports national security objectives.
He further cautioned against introducing Merchant Discount Rate charges solely to address concerns raised by the United States or to safeguard the commercial interests of global payment companies such as Visa and Mastercard. Instead, he said, any future decision regarding transaction fees should be guided by the actual costs of operating and expanding India’s digital payments infrastructure while ensuring its long-term sustainability.