5 Congress leaders were on panel recommending tiered UPI-MDR: BJP
What's the story
The Bharatiya Janata Party (BJP) has claimed that five Congress MPs were part of a panel that recommended the implementation of a tiered Merchant Discount Rate (MDR) framework for the Unified Payments Interface (UPI). The clarification comes as Congress leader Rahul Gandhi has demanded that the new charge—up to 0.04% on merchants for transactions above ₹2,000 from October 15—be rolled back. The report was adopted on August 12 without any dissent from the Congress leaders, sources told India Today.
Financial sustainability
Parliamentary finance committee warned of financial risks
Congress leaders P Chidambaram, Manish Tewari, Gaurav Gogoi, Kishori Lal and K Gopinath were the five MPs who were on the Parliamentary Standing Committee on Finance that called for a tiered MDR framework on UPI transactions.
The committee, chaired by Bhartruhari Mahtab of the BJP, had recommended immediate notification and implementation of the tiered MDR framework.
The panel noted a huge gap between the ₹2,000 crore budgetary allocation for the UPI ecosystem and an estimated operational cost of ₹20,700 crore.
Incentives and proposals
Suggestions for self-sustaining revenue model to boost digital payments
The panel warned that delays could leave payment service providers reliant on insufficient government support, impacting investments in cybersecurity and fraud prevention.
It also suggested that the Department of Financial Services consider a self-sustaining tiered revenue model with multi-year schemes and cashback incentives to boost digital payments.
It clarified that government incentives for RuPay debit cards and low-value BHIM-UPI transactions were meant to cover costs due to the zero-MDR policy.
Policy criticism
Report was tabled on August 12
The panel stated that a viable revenue model was necessary to ensure that the UPI ecosystem became financially sustainable without "perpetually straining" the government exchequer.
The report was tabled on August 12, two days after the Rajya Sabha cleared the legislation amending the Payment and Settlement Systems Act, 2007, to eliminate the legal barrier to levying MDR on UPI and RuPay debit card payments.
Panel
Government announces fee on UPI payments
This week, the government announced a fee of 0.4% on UPI payments above ₹2,000 to merchants from October 15.
Person-to-person transfers and small payments are exempt from this charge.
The fee is payable by merchants and capped at ₹300 for transactions of ₹75,000 or more. Payments above ₹2,000 for railways, telecoms, etc. will attract a flat MDR of ₹5, while capital-market payments will attract an MDR of 0.02% subject to a cap of ₹300.
Gandhi
Gandhi alleges PM under US pressure
Calling it "UPI tax," Gandhi has demanded a rollback of the MDR framework, alleging it would benefit foreign companies.
He alleged that Prime Minister Narendra Modi is acting under pressure from the United States to impose these charges.
The government has rejected these allegations, saying the MDR is a charge within the merchant payments ecosystem and not a fee on consumers.