DPI Brief — August 11, 2026
Parliament Clears Path for UPI Merchant Fees, Ending Zero-MDR Era
The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026 on August 6, creating the legal groundwork for reintroducing Merchant Discount Rates (MDR) on UPI transactions. The amendment authorises the government to permit banks and service providers to levy charges on electronic payments, a power that had effectively been suspended since the zero-MDR mandate of January 2020. The government has clarified that person-to-person (P2P) payments will remain free for citizens; any MDR would apply only to merchant transactions, with reports suggesting rates of 0.25–0.30% for high-value transactions by large merchants. The actual structure—including thresholds and rate slabs—will be decided by the NPCI-headed UPI and Services Steering Committee once the bill receives Rajya Sabha approval. The move comes as UPI’s growth moderates: transaction volumes grew 23.5% year-on-year between April and July FY27, down from 33.5% in the same period last year, even as value growth held steady at ~20%.
UPI Notches July Record: 23.66 Billion Transactions Worth ₹29.9 Lakh Crore
UPI processed a record 23.66 billion transactions worth ₹29.88 lakh crore in July 2026—roughly 76 crore transactions daily. The milestone caps a fiscal year where UPI remains India’s dominant digital payment rail, accounting for nearly 88% of all digital transactions. However, the moderating volume growth trajectory has added urgency to the MDR debate: the network’s expansion, while still robust in absolute terms, is decelerating from the heady 41% growth recorded in FY25. The value resilience—indicating a shift toward higher-value payments—has kept the per-transaction economics under scrutiny.
Government e-Marketplace Completes a Decade, Surpasses ₹20 Lakh Crore GMV
The Government e-Marketplace (GeM) marked ten years of operations on August 9, transforming from a ₹422-crore GMV platform in its first year to processing over ₹1,55,000 crore annually. Cumulative GMV has crossed ₹20 lakh crore through more than 3.78 crore orders. Over 12.28 lakh micro and small enterprises—including 2.25 lakh women-led MSEs—and 42,000 startups are registered on the portal. Commerce Minister Piyush Goyal highlighted that MSEs have fulfilled orders worth over ₹9 lakh crore, accounting for 45.6% of total procurement value. GeM’s journey mirrors the broader DPI playbook: start with a government use-case, build scale, then drive inclusion for smaller players who traditionally struggled with opaque procurement processes.
Favara-UPI Cross-Border Corridor Goes Live in Maldives
The Maldives officially activated the Favara-UPI cross-border payment corridor, enabling real-time person-to-person fund transfers between Maldivian and Indian bank accounts via the Bank of Maldives mobile app. The corridor currently supports P2P transfers, with person-to-merchant (P2M) payments expected to roll out in the coming year. This is India’s latest bilateral UPI linkage, extending the network’s international footprint beyond Nepal, Sri Lanka, UAE, Singapore, and France. For the Maldives, the integration reduces dependence on correspondent banking channels for remittances and trade payments—aligning with India’s broader strategy of exporting DPI stack components as diplomatic and economic infrastructure.
NIC Deploys 1.1 EFLOPS AI Compute; Jaipur Declaration Sets AI Governance Roadmap
The National Informatics Centre (NIC) is deploying a ~1.1 EFLOPS high-performance AI compute system at its Delhi data centre, designed to support AI-driven governance applications across central and state departments. The deployment was flagged at the 29th National Conference on e-Governance, which also produced the 2026 Jaipur Declaration—a roadmap for AI-enabled, data-driven, and citizen-centric digital governance. The declaration reinforces India’s intent to build sovereign AI compute capacity rather than rely entirely on commercial cloud providers, and to embed AI into service delivery platforms like CPGRAMS and e-Office. NIC also showcased its e-SANAD portal for paperless document attestation and the DAANVEER platform for rural governance, underscoring the breadth of its infrastructure role beyond hosting.