New Delhi: The Centre has rejected allegations that the decision to introduce Merchant Discount Rate (MDR) on select UPI transactions was driven by pressure
from the United States.
The Finance Ministry described the claim as an “External Pressure” myth and said India’s digital payments policy is framed independently, with the aim of making UPI financially sustainable while keeping it accessible.
UPI MDR row
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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:
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✅ Small… pic.twitter.com/PyQ7hotNMN— Ministry of Finance (@FinMinIndia) September 16, 2026
“Debunking the “External Pressure” Myth: Some claims suggest the change is due to foreign influence. This is false. India’s UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem,” the ministry said.
The clarification came after Congress leader Jairam Ramesh alleged that the government had responded to US concerns by ending the zero-MDR regime for certain merchant payments.
“Here, the Modi government has given into a US demand to get rid of zero MDR and charge for UPI. The U.S. Trade Representative earlier this year criticized UPI for being free and having driven out Visa and Mastercard,” Ramesh said.
He also questioned why the new rate was fixed at 0.4% and whether it could give foreign card networks greater room to compete with UPI.
What new MDR means
Under the new framework, a 0.4% MDR will apply to specified person-to-merchant UPI transactions above Rs 2,000 from October 15. The charge will be capped at Rs 300 for transactions of Rs 75,000 and above.
The government has stressed that the charge is part of the merchant payment ecosystem and will not be collected from consumers.
“Customers will not be required to pay any charge when making such payments through UPI,” the Finance Ministry said.
Person-to-person payments will remain completely free, while payments up to Rs 2,000 and transactions covered under the zero-MDR framework for small merchants will also remain free. The government said around 96% of merchant transactions will remain unaffected.
The issue has nevertheless triggered a political dispute, with Congress terming the measure a “Modi tax”, while the BJP has rejected the allegations and accused the opposition of spreading misinformation.
