New Delhi, Aug. 4 -- More than half of Unified Payments Interface (UPI) users are likely to switch to other modes of payment for transactions exceeding Rs.3,000 if the central government approves the proposed amendments to the Payment and Settlement Systems Act, 2007, which could effectively bring back merchant discount rates (MDR) on UPI transactions.

The amendments would allow the government to introduce MDR on UPI by removing the zero-MDR provision under Section 10A, which currently prevents banks and payment service providers (PSPs) from charging fees on notified digital payments.

Notably, the Bill does not propose any fees for consumers using UPI, meaning the burden would fall on merchants. For customers, this means there should be...