New Delhi, Aug. 3 -- The Union Ministry of Finance has today proposed amendments to the Payment and Settlement Systems Act, 2007, which could in effect bring back merchant discount rates (MDR) on transactions done through the unified payments interface (UPI). Aimed at "funding UPI's next phase of growth".

The amendments would allow the ministry to enable MDR on UPI and propose scrapping of the zero MDR provision under Section 10A, which bars banks and payments system providers (PSPs) from imposing charges on online payments.

Regulated by the Reserve Bank of India (RBI), merchant discount rate or MDR is the fee businesses pay to banks and PSPs to process online transactions made by customers.

Since 2020, this stands at 0% for UPI and Ru...