Archive · 16 Sep 2026
Centre Rejects Foreign Pressure Claims Over New UPI Charges
India is adding a small fee to some larger UPI payments made to merchants.
The change is scheduled to begin on October 15.
Customers will not pay the fee directly; merchants will pay it.
Sending money from one person to another will remain free.
Small merchants collecting up to Rs 1 lakh each month through UPI QR codes will also remain exempt.
Most ordinary merchant payments are below the Rs 2,000 threshold and will stay free.
The government says the money will help make UPI safer and support smaller businesses.
Opposition leaders say the decision may have resulted from pressure from the United States, but the government denies that claim.
The Finance Ministry denied that foreign influence led to the new UPI Merchant Discount Rate framework.
From October 15, a 0.4% MDR will apply to eligible person-to-merchant UPI payments above Rs 2,000.
Merchants, rather than consumers, will pay the charge, which is capped at Rs 300 per transaction.
Person-to-person transfers, small merchants, rural and semi-urban QR payments, and most everyday transactions will remain free.
The government and NPCI say MDR revenue will support infrastructure, cybersecurity, fraud prevention, innovation, and small-business expansion.
- Who
- The Union Finance Ministry, the National Payments Corporation of India, and Opposition leaders including Rahul Gandhi, Mallikarjun Kharge, K C Venugopal, and Jairam Ramesh.
- What
- The government is introducing a Merchant Discount Rate of up to 0.4% on certain UPI merchant payments above Rs 2,000 while rejecting claims of foreign influence.
- When
- The policy was defended on September 16, 2026, and is scheduled to take effect on October 15, 2026.
- Where
- Across India's Unified Payments Interface network.
- Why
- The government says the MDR will help make UPI financially sustainable and fund infrastructure, cybersecurity, innovation, fraud prevention, and support for smaller merchants.
Government and UPI Officials
Opposition Critics
Cause of the MDR decision
Government and UPI Officials
The Finance Ministry says the policy was made independently to create a self-sustaining, inclusive, affordable, secure, and innovative digital-payments ecosystem.
Opposition Critics
Congress and other Opposition leaders allege that the government introduced the MDR after yielding to pressure from the United States and foreign payment companies.
Whether MDR is a tax
Government and UPI Officials
The government says MDR is neither a tax nor a government or NPCI charge; the revenue will be distributed among banks, payment-app providers, and other ecosystem participants.
Opposition Critics
Rahul Gandhi called the measure a “UPI tax,” while K C Venugopal described it as a “new Modi tax.”
Impact on consumers
Government and UPI Officials
Officials say consumers, person-to-person transfers, small merchants, and most everyday payments will remain unaffected, and that merchants cannot pass the MDR directly to customers.
Opposition Critics
Opposition leaders argue merchants may ultimately recover the cost through higher prices and that the policy could help international card networks compete with UPI.
- Standard MDR
- Up to 0.4% on eligible person-to-merchant UPI payments above Rs 2,000.
- Payment responsibility
- Merchants will pay the MDR; consumers are not to be charged directly, and the fee is capped at Rs 300 per transaction.
- Exempt transactions
- Person-to-person transfers, merchant payments up to Rs 2,000, and small merchants collecting up to Rs 1 lakh monthly through UPI QR codes remain free.
- Essential services
- Railway, fuel, telecom, bill-payment, and insurance transactions above Rs 2,000 will carry a flat Rs 5 merchant fee.
- Capital markets
- Mutual-fund and securities transactions will carry an MDR of 0.02%, capped at Rs 300.
- Small-business support
- Five percent of MDR collections will go to a fund intended to expand UPI acceptance among small merchants.
- UPI scale
- UPI processed 24.5 billion transactions in August 2026 and handled roughly Rs 314 lakh crore in financial year 2025-26.
Sources
‘This Is False’: Govt Rejects Foreign Influence Claim Over New UPI Merchant Fee
UPI MDR Row: Centre Rejects Foreign Influence Claims, Says Policy Decisions Are Independent
Centre Rejects Foreign Influence Claims Over UPI MDR Charges, Says Digital Payments Policy Is Independent
No foreign hand in UPI fee call, says finance ministry
Centre denies US pressure, says MDR on UPI payments is India’s own decision - Telegraph India
"No Foreign Influence": On UPI Charges, Centre Trashes Opposition's Claim
UPI MDR changes: Govt debunks 'foreign influence' claims
