New Delhi, Aug. 5 -- The Union Finance Ministry has proposed amendments to the Payment and Settlement Systems Act, 2007, which could allow the reintroduction of Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions for select categories, particularly large merchants.

The move is seen as an initial step towards creating a sustainable revenue model for India's rapidly expanding digital payments ecosystem.

The proposal includes removing provisions under Section 10A that currently bar banks and payment service providers from levying charges on notified electronic payment modes. Once approved by Parliament, the government would be authorised to notify the transactions and categories where MDR may apply.

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