DPI Brief — August 08, 2026

Lok Sabha Passes Bill Enabling MDR on UPI — L2 Payments

The Lok Sabha on August 6 passed the Taxation and Other Laws (Amendment) Bill, 2026, amending the Payment and Settlement Systems Act, 2007 to empower the Central Government to permit banks and payment service providers to levy charges on UPI and other notified electronic payment modes. The amendment removes the legal restriction on charging Merchant Discount Rate (MDR), a long-standing policy that made UPI effectively free for all parties.

Finance Minister Nirmala Sitharaman clarified that the NPCI-headed UPI and Services Steering Committee has not yet decided on MDR rates — any decision will follow the Bill becoming law. The Payments Council of India (PCI) separately stated that consumers and small merchants (including kirana stores) would remain protected from charges. SBI chairman CS Setty noted that quantifying UPI operating costs is difficult since the infrastructure is largely shared across payment systems.

Former BharatPe co-founder Ashneer Grover called the move “regressive,” warning it could stall mobile payment growth. The Bill must still pass the Rajya Sabha.

Sources: PIB, Vajiram & Ravi, A2Z Taxcorp

UPI Meta Proposal Draws Fintech Fire Over Competition Concerns — L2 Payments

NPCI’s proposed UPI Meta protocol — which would let users set a default UPI app for faster checkout — faces pushback from seven fintech companies: Paytm, BharatPe, CRED, Navi, Kiwi, FamPay, and Super.money. In a joint letter to NPCI, the companies argued that persistent default settings could reduce consumer choice and entrench the market position of already-dominant players like Google Pay and PhonePe.

NPCI maintains the framework is user-chosen — it neither prescribes a default nor favours any TPAP. Legal analysis by LawBeat notes the distinction from antitrust cases where companies imposed their own defaults, but observes that competition law increasingly scrutinises interface design as a source of market power. NPCI has also directed all UPI apps and banks to stop displaying full mobile numbers by September 4, in line with DPDP Act data minimisation requirements.

Sources: LawBeat, Economic Times

ONDC Crosses 500 Million Cumulative Transactions — L4 Commerce

The Open Network for Digital Commerce (ONDC) crossed 500 million cumulative transactions in July 2026, according to a Rajya Sabha written reply by the Department for Promotion of Industry and Internal Trade (DPIIT) on August 7. The network has scaled from 0.2 million transactions in FY23 to 218 million in FY26, with the trajectory accelerating sharply into FY27.

Beyond retail e-commerce, ONDC has expanded into mobility (with over 10 lakh drivers on the network), public transport ticketing (covering ~80% of India’s metro systems), tourism, and financial services. Over 2 lakh retail merchants are now active. The government has approved a ₹277.35 crore outlay under the MSME TEAM Initiative — a World Bank-supported RAMP programme sub-component — to onboard micro and small enterprises onto the network through FY27.

Sources: Moneycontrol

2.35 Crore Ration Cards Removed in Aadhaar-Linked Cleanup — L1 Identity / L6 Governance

Over 2.35 crore ration cards have been removed this year as the Centre intensifies a nationwide deduplication drive linked to Aadhaar seeding and eKYC verification of Public Distribution System beneficiaries. The cleanup aims to weed out duplicate, ineligible, and ghost cards that have historically siphoned food subsidy allocations.

The scale of removals underscores Aadhaar’s growing role as the foundational identity layer not just for direct benefit transfers but for the entire governance stack of service delivery. While the drive has drawn criticism over exclusion risks for genuine beneficiaries with authentication failures, the government maintains that the savings justify the exercise.

Sources: Illustrated Daily News

Microsoft Launches Fourth India Cloud Region — L7 Trust Infrastructure

Microsoft activated its fourth India cloud region (India South Central) in Hyderabad on August 7, adding to existing regions in Pune, Chennai, and Mumbai. The new region is designed for mission-critical workloads with enhanced data residency, resilience, and compliance capabilities — directly relevant to India’s tightening data sovereignty requirements under RBI localisation mandates, CERT-In directives, and the DPDP Act.

The launch comes as Microsoft reports strong double-digit Azure growth in India. India’s DPI ecosystem increasingly depends on domestic cloud infrastructure to meet regulatory requirements for payment data localisation, 180-day log retention, and prompt cyber incident reporting. Google, too, is building a $15 billion data centre hub in Andhra Pradesh (with Adani Group), though that project faces environmental opposition.

Sources: Developing Telecoms

Layers covered today: L1 (Identity), L2 (Payments), L4 (Commerce), L6 (Governance), L7 (Trust Infrastructure)