'False': Government responds to 'external pressure' charge over UPI fee
What's the story
The Indian government has rejected allegations that its decision to implement Merchant Discount Rate (MDR) on select Unified Payments Interface (UPI) transactions was under pressure from the United States. The Ministry of Finance clarified that India's digital payments policy is formulated independently, without external influence. The clarification comes after the Congress party alleged that the government succumbed to a US demand by ending the zero-MDR regime for certain UPI merchant payments.
Twitter Post
Check clarification here
🔰 UPI Remains Free for Consumers
— Ministry of Finance (@FinMinIndia) September 16, 2026
UPI continues to be free for customers. Sending money to friends, paying at shops, or scanning a QR code — all remain without charges.
Key Facts:
✅ No charges on P2P: Person-to-Person transfers are always free, regardless of amount.
✅ Small… pic.twitter.com/PyQ7hotNMN
Political debate
Congress links MDR charge to US demands
Congress leader Jairam Ramesh questioned the need for a 0.4% MDR, asking if it was to help American card networks compete with UPI.
"Why 0.4% MDR? Is it because debit card MDR is also 0.4%? Is this being done to enable US card companies to compete with UPI?" he said.
He linked this issue to broader tensions between New Delhi and Washington, citing proposed US legislation that could impose up to 100% tariffs on countries trading in Russian energy.
Decision defense
Political fallout continues with 'Modi tax' jibe
In a post on X, the Finance Ministry defended its decision, saying the MDR is a charge within the merchant payments ecosystem and not a fee on consumers.
It assured that customers won't be charged for making UPI payments.
"UPI continues to be free for customers. Sending money to friends, paying at shops, or scanning a QR code — all remain without charges. No charges on P2P: Person-to-Person transfers are always free, regardless of amount," it said.
Counterclaim
BJP dismisses Congress's allegations
However, this clarification hasn't stopped backlash, with Congress calling it a "Modi tax."
Calling Modi "compromised," Rahul Gandhi earlier alleged "the government was 'once again surrendering'" to American pressure.
Shortly after his charge, the National Payments Corporation of India (NPCI) announced that an MDR will be applicable on select person-to-merchant (P2M) UPI transactions.
Starting October 15, merchants will have to pay 0.4% fee on transactions exceeding ₹2,000 and up to a maximum of ₹300 for payments worth ₹75,000 or more.