Archive · 17 Sep 2026
Pinarayi Vijayan Calls New UPI Merchant Fee Daylight Robbery
The government plans to charge a small fee on some UPI payments made to businesses.
The fee will be 0.4% when the payment is more than Rs 2,000.
This rule is scheduled to begin on October 15.
Payments between two people will still be free.
Business payments of Rs 2,000 or less will also remain free.
Pinarayi Vijayan called the fee unfair and compared it to daylight robbery.
He said businesses might raise prices to recover the cost from customers.
The Finance Ministry said the change is meant to make the digital payments system fairer for its participants.
The two sides disagree about whether the fee will mainly help companies or improve the payments system.
Pinarayi Vijayan criticized the Centre’s decision to charge a 0.4% fee on specified high-value UPI merchant transactions.
The fee will apply to person-to-merchant UPI payments above Rs 2,000 from October 15.
Vijayan said the charge would ultimately raise costs for consumers and benefit large fintech companies and private banks.
Person-to-person payments and merchant transactions up to Rs 2,000 will remain free under the announced framework.
The Finance Ministry rejected allegations of foreign influence, saying the framework would create a level playing field in digital payments.
- Who
- Pinarayi Vijayan criticized the Centre; the Finance Ministry defended the new framework.
- What
- A 0.4% Merchant Discount Rate will be charged on specified person-to-merchant UPI transactions above Rs 2,000.
- When
- The fee is scheduled to begin on October 15; Vijayan’s criticism was reported on September 17.
- Where
- The decision concerns India’s UPI digital payments system; Vijayan’s statement was reported from Thiruvananthapuram.
- Why
- The Centre said the framework would provide a level playing field, while Vijayan said it would benefit large fintech companies and shift costs to consumers.
Criticism of the fee
Government defense
Who bears the cost?
Criticism of the fee
Pinarayi Vijayan said merchants would likely pass the fee on to consumers through higher prices, placing the financial burden on ordinary people.
Government defense
The Finance Ministry said the framework was designed to create a level playing field for stakeholders in the digital payments ecosystem.
Who benefits?
Criticism of the fee
Vijayan alleged that the decision would protect foreign financial agencies, private banks and large fintech companies at the expense of the public.
Government defense
The Finance Ministry rejected allegations of foreign influence and presented the change as a policy for balancing interests in digital payments.
Impact on Digital India
Criticism of the fee
Vijayan argued that people had adopted UPI after being assured that transactions would remain free, making the proposed charge unacceptable.
Government defense
The government’s announced framework preserves free person-to-person payments and free merchant payments up to Rs 2,000.
- Proposed fee
- 0.4% Merchant Discount Rate
- Affected payments
- Specified person-to-merchant UPI transactions above Rs 2,000
- Effective date
- October 15
- Payments remaining free
- Person-to-person transactions and merchant payments up to Rs 2,000
- Pinarayi Vijayan’s description
- He called the proposed charge “daylight robbery.”
- Government rationale
- The Finance Ministry said the framework would provide a level playing field for stakeholders in digital payments.