3 weeks ago

US pressure behind India's proposed UPI-RuPay transaction fee levy

US pressure behind India's proposed UPI-RuPay transaction fee levy
The hidden Trump factor in India’s proposed new UPI transaction levy · indianexpress.com

In India, millions of people pay with their phones using a system called UPI, and it has always been free to use.

Now, India's government has proposed a new law that would let banks and payment companies charge fees for UPI and RuPay card payments.

Big American companies like Visa and Mastercard have been asking for this change because they lose money when people pick free phone payments instead of cards.

The United States government says India's payment rules are unfair to American companies and has called them a 'foreign trade barrier.'

The US has also complained about Brazil's free payment system called Pix, and it put a 25% tax on goods from Brazil because of it.

In India, Congress leader Jairam Ramesh says the real reason for the new fee is pressure from the United States.

Finance Minister Nirmala Sitharaman disagrees, saying the fee would be paid by shops or merchants, not by people using UPI.

She also said nothing is final yet and that the decision will come only after Parliament passes the new law.

India's free UPI system, launched in 2016, has helped millions of people pay without using cards.

Key facts

Proposed change
Banks and payment system providers could charge fees on UPI and RuPay debit card payments
UPI launch year
2016
USTR action
Classified India's digital payment policies favouring domestic players as a foreign trade barrier in March
NPCI market share cap
30% cap on third-party UPI apps, enforcement deferred to December 2026
US-owned UPI suppliers' share
Over 80% of UPI transactions as of December 31, 2025 (PhonePe and Google Pay)
US action on Brazil
25% tariffs under Section 301 of the US Trade Act of 1974 over the Pix platform
Related Bill
Taxation and Other Laws (Amendment) Bill, 2026, amending Section 10A of the Payment and Settlement Systems Act, 2007
Abolished tax
6% 'Google tax' removed last year amid US tariff pressure

Quotes

U.S. Trade Representative (USTR)

Representative of the U.S. Trade Representative

“"it has expressed concerns related to the inability of US electronic payment services suppliers to participate in the UPI ecosystem, including credit transactions on UPI on a level playing field with RuPay"”
indianexpress.com

Finance Minister Nirmala Sitharaman

India’s Finance Minister

“"Merchant Discount Rate (MDR) applies only on the merchants and not on the end users/customers."”
indianexpress.com

Sources

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