ET BureauA mule account is a payment account used to receive, move and hide illegal money. In its report, the committee also noted that any delay in the merchant discount rate (MDR) for high-value transactions leaves payment service providers heavily dependent on inadequate subsidies, thereby threatening critical investments in cybersecurity, fraud prevention, and network infrastructure. The report, tabled on Wednesday, also recommended that the government should explore a self-reliant, tiered revenue model to ensure that the Unified Payments Interface (UPI) ecosystem achieves financial sustainability without perpetually straining the exchequer.
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Parliament has passed amendments to the Payment and Settlement Systems (PSS) Act, 2007, which will allow the Centre to permit banks and other service providers to levy charges on transactions made through UPI and other notified digital payment modes.
The parliamentary standing committee on finance, headed by Bhartruhari Mahtab, noted that while UPI is expected to process up to 150 billion transactions per month and add 600 million new users, the current government incentive covers merely 11% of the industry’s actual costs and 14% of potential MDR collections, creating a structural funding gap which is impacting long-term infrastructural investment. The committee stated that it remains deeply concerned by the mismatch between the ₹2,000 crore allocation and the industry’s estimated operational cost of ₹20,700 crore.
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Last week, the finance ministry noted that any future MDR charges on UPI transactions will be nominal and apply only to a limited set of merchant transactions.