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Swadeshi Jagran Manch Opposes New UPI Merchant Fee
India’s government has introduced a fee for some large UPI payments made to businesses.
The fee is 0.4% when a merchant transfer is more than Rs 2,000.
People sending money to other people will still be able to use UPI for free.
Small payments will also remain free.
The Finance Ministry said the fee is part of the merchant payment system, not a direct charge on customers.
Swadeshi Jagran Manch disagrees with the policy.
It says banks have not asked for the fee and that UPI has already lowered some banking costs.
The group also says foreign pressure and cybersecurity expenses should not be reasons to impose the fee.
Swadeshi Jagran Manch urged the government to reconsider a 0.4% MDR on UPI merchant transfers above Rs 2,000.
The fee is scheduled to apply from October 15, while person-to-person payments and small payments remain free.
The Finance Ministry said customers will not directly pay the merchant discount rate.
SJM said banks have not requested MDR and that UPI has reduced costs by lowering reliance on ATMs.
SJM argued that cybersecurity costs and United States trade concerns should not justify changing India’s zero-MDR approach.
- Who
- The Swadeshi Jagran Manch, represented by co-convener Ashwani Mahajan, criticized the government’s UPI fee policy.
- What
- The government introduced a 0.4% merchant discount rate on UPI merchant transfers above Rs 2,000.
- Where
- The policy concerns India’s Unified Payments Interface system.
- When
- The government announced the change a day before the reported criticism, with the fee taking effect on October 15; the criticism was reported on Wednesday.
- Why
- SJM says the fee is not justified by actual costs, could weaken a major Indian achievement, and should not be driven by foreign concerns.
Opposition to MDR
Government Fee Policy
Whether the fee is justified
Opposition to MDR
Swadeshi Jagran Manch says the amount involved is too small to justify MDR and that UPI has reduced banks’ operational costs, including through lower reliance on ATMs.
Government Fee Policy
The government has introduced a 0.4% MDR for merchant transfers above Rs 2,000 while preserving free person-to-person and small payments.
Who should bear the cost
Opposition to MDR
SJM argues cybersecurity and related expenses are part of banks’ own operations and should not be used to justify a UPI fee.
Government Fee Policy
The Finance Ministry describes MDR as a charge within the merchant payment ecosystem rather than a direct charge on customers.
Influence of international concerns
Opposition to MDR
SJM says concerns from the United States Trade Representative should not influence India’s policy, arguing that card companies such as Visa and Mastercard have lost business to UPI.
Government Fee Policy
The reported policy change reflects the government’s decision to introduce MDR for a limited category of merchant transactions; the articles do not state the government’s response to SJM’s criticism.
Key facts
- Fee rate
- 0.4% merchant discount rate
- Threshold
- UPI merchant transfers above Rs 2,000
- Effective date
- October 15
- Customer payments
- Person-to-person payments and small payments remain free
- Usage limits
- Individuals retain unlimited free UPI usage, with no monthly quotas, volume restrictions, or tiered caps
- SJM position
- The government should reconsider imposing MDR
- Government explanation
- MDR is a charge within the merchant payment ecosystem, not a charge on customers
Quotes
Ashwani Mahajan
Co-convener of the Swadeshi Jagran Manch
“No bank has demanded MDR on UPI. In fact, UPI has reduced the transaction costs of banks. So many ATMs have closed down because they are no longer required, and banks should be happy with the zero-MDR system.”
rediff.com
“The amount involved is not so large that there should be so much of a scramble to impose MDR. The government needs to rethink the decision after considering all these factors.”
rediff.com
Sources
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