6 min readAug 22, 2026 06:41 AM IST First published on: Aug 22, 2026 at 06:38 AM ISTIn March 2017, in these pages, I argued that there was no justification for a Merchant Discount Rate (MDR) on mobile payments, and that a less-cash India depended on keeping them free (Conditions for a less-cash India, IE, March 4, 2017). That argument concerned an infant technology; it now has fresh urgency. Earlier this month, Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026, rewriting Section 10A of the Payment and Settlement Systems Act. That section barred any charge on BHIM-UPI and RuPay. The amendment replaces the bar with an enabling provision, allowing the government to notify in the future which modes can carry a charge. No charge is imposed today. But the door has been unlocked, and we should not walk through it.Consider what UPI has become. In 2025-26, it carried over 24,000 crore transactions — roughly 66 crore — worth about Rs 314 lakh crore, accounting for some 85 per cent of India’s digital retail payments and nearly half the world’s real-time payments. It is overwhelmingly a system of small sums: The average transaction is about Rs 1,300, and 86 per cent of merchant payments are below Rs 500. Such transactions involve the vegetable seller, the auto driver, and the kirana shop. A charge here is not a charge on commerce in the abstract; it is a levy on the smallest transactions of the poorest.