DPI Brief — August 04, 2026

1. Payments Act Amendment Clears Path for UPI MDR — L2 (Payments)

The Finance Ministry has proposed amending the Payment and Settlement Systems Act to scrap the zero-MDR (Merchant Discount Rate) provision that has kept UPI transactions free for merchants since 2020. The proposed amendment shifts the power to notify “fee-protected” payment modes from RBI to the Centre — a move widely seen as a precursor to introducing merchant charges on UPI payments.

The development comes as UPI transaction values hit a record ₹29.9 lakh crore in July 2026, according to NPCI data. Industry sources quoted in Business Standard suggest the amendment is an early structural step; the government has emphasised that end consumers will not bear any additional charges.

This is a foundational shift in India’s payments DPI architecture. Since its inception, UPI’s zero-MDR policy was the key driver of merchant adoption. Any move away from it — even if phased — will reshape the economics of digital payments for small merchants and could accelerate the ongoing debate about sustainable payment infrastructure funding.

2. CKYC 2.0 Goes Live with Unified Customer ID — L1 (Identity) × L2 (Payments)

India’s Central KYC Registry received a major upgrade with the CKYC 2.0 launch on August 1, 2026. The revamped system introduces a single 14-digit CKYC identification number that can be reused across banks, insurance companies, and investment platforms — eliminating the need to submit Aadhaar and PAN documents repeatedly for each financial institution.

The initial rollout covers banks and insurance companies, with mutual funds and stockbrokers to follow. By centralising KYC data, CKYC 2.0 directly addresses one of the biggest friction points in financial onboarding: repeated document submission. This is a significant step toward interoperable identity infrastructure, linking Aadhaar-based eKYC verification with a unified financial identity layer.

3. Aadhaar Offline Verification Crosses 100 Entity Onboarding Milestone — L1 (Identity)

Within three months of its rollout, Aadhaar’s offline verification system has onboarded over 100 entities as Offline Verification Seeking Entities (OVSEs). The system allows verification of Aadhaar holders without real-time connectivity to UIDAI’s servers, using a stored token that shares minimal data — only the photo, name, and a verification status.

Separately, UIDAI has extended its waiver on email address update charges through the Aadhaar mobile app until December 31, 2026, encouraging citizens to maintain updated contact information for digital service delivery.

The eShram portal, India’s unorganised worker database, has also crossed 31.82 crore registrations, all authenticated through Aadhaar-based eKYC with key demographic fields fetched directly from UIDAI — a practical demonstration of Aadhaar as the identity backbone for sectoral DPI.

4. Poshan Tracker Linked with ABHA Under ABDM — L5 (Sectoral)

The government’s Poshan Tracker — the ICDS (Integrated Child Development Services) nutrition monitoring platform — has been integrated with ABHA (Ayushman Bharat Health Account) IDs, advancing unified digital health records under ABDM. The linkage means beneficiary health data from anganwadi-level nutrition interventions can now be associated with individual ABHA health IDs.

This is significant because ABDM has now crossed 90 crore ABHA accounts and over 100 crore linked health records. Integrating a nutrition tracking system with the digital health ID creates a more comprehensive health profile — especially for women and children who are primary beneficiaries of ICDS services. It also demonstrates how sectoral DPIs can interoperate through shared identity layers.

5. TRAI Organises Quantum-Safe Communication Workshop — L7 (Trust)

At TrustCon 2026, TRAI organised a technical workshop on quantum-safe communication, bringing together experts to discuss post-quantum cryptography and its implications for India’s telecom infrastructure. With quantum computing advancing rapidly, the workshop addressed the need to prepare India’s communication networks against future quantum threats — where current encryption standards could become vulnerable.

TRAI also updated its MyCall app to strengthen consumer feedback on call quality, continuing its push for data-driven telecom regulation. Separately, the 72-hour data breach notification duty under the DPDP Act continues to generate compliance activity across the telecom and fintech sectors, with Jio’s reported handling of DPDP obligations drawing public scrutiny.

Covering L1 Identity, L2 Payments, L5 Sectoral, and L7 Trust layers. Sources: PIB, Business Standard, UIDAI, DHN, TRAI.