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India’s UPI Fee Reversal Sparks Questions Over Earlier Denial
The government has decided to charge a small fee on some large UPI payments made to businesses.
The fee will be 0.4% when the payment is more than Rs 2,000.
It will start on October 15.
The government says ordinary people will not be charged directly.
It also says payments between individuals and small payments will stay free.
Last year, the Finance Ministry said reports of such a UPI fee were completely false.
Critics say the new fee contradicts that earlier statement.
Some people also worry that businesses could pass the cost on to customers.
The government introduced a 0.4% fee on UPI merchant transfers above Rs 2,000, effective October 15.
The Finance Ministry said customers will not pay the fee and that person-to-person payments remain free.
In June 2025, the ministry called reports of a planned UPI Merchant Discount Rate completely false and misleading.
Opposition MPs criticized the decision as anti-people and said the issue may be discussed by Parliament’s Finance Committee.
Social media users and a stocks trader argued that merchants such as brokers could pass the cost on to customers.
- Who
- The Union government and Finance Ministry introduced the fee; Opposition MPs, social media users and others criticized it.
- What
- A 0.4% Merchant Discount Rate will apply to UPI payments above Rs 2,000 made to merchants, while person-to-person payments remain free.
- Where
- The policy applies to UPI merchant payments in India.
- When
- The policy was announced on Tuesday and is scheduled to take effect on October 15; the earlier denial was posted on June 11, 2025.
- Why
- The articles report the fee as a change to the merchant payment system, while critics argue it could ultimately raise costs for customers.
Critics and Opposition MPs
Government Position
Whether the policy is anti-people
Critics and Opposition MPs
Opposition MPs described the fee as anti-people and said it could affect the entire population.
Government Position
The Finance Ministry says the fee is part of the merchant payment ecosystem and does not charge customers making UPI payments.
Whether the new policy contradicts the earlier denial
Critics and Opposition MPs
Social media users highlighted the ministry’s June 2025 statement denying plans to impose UPI MDR and accused the government of doublespeak.
Government Position
The ministry’s current position distinguishes the merchant-side fee from charges on customers and says everyday person-to-person UPI use remains free.
Who will ultimately bear the cost
Critics and Opposition MPs
A stocks trader argued that brokers could recover MDR expenses by raising brokerage charges, meaning customers would pay indirectly.
Government Position
The government states that MDR is a charge within the merchant payment ecosystem rather than a direct fee on UPI customers.
Key facts
- Merchant fee
- 0.4% on UPI transfers above Rs 2,000 made to merchants
- Effective date
- October 15
- Customer payments
- The Finance Ministry says customers will not be charged directly
- Free transactions
- Person-to-person payments and small payments remain free, with unlimited individual usage
- Earlier government statement
- On June 11, 2025, the Finance Ministry called reports of a planned UPI MDR completely false, baseless and misleading
- Parliamentary response
- Some MPs said the issue may be taken up at the next meeting of the Parliamentary Standing Committee on Finance
- Critics’ concern
- Businesses, including brokers, may pass MDR costs on to customers through higher charges
Quotes
Union finance ministry
India’s finance ministry, which issued the earlier statement on UPI charges
“Customers will not be required to pay any charge when making such payments through UPI. MDR is a charge within the merchant payment ecosystem. It is not a charge on customers making UPI payments.”
telegraphindia.com
“Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading.”
telegraphindia.com
N.K. Premchandran
RSP member of the Parliamentary Standing Committee on Finance
“It is a completely anti-people decision.”
telegraphindia.com
Sources
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