NEW DELHI, Sep 16: The Congress on Wednesday criticised the Centre over its decision to introduce a Merchant Discount Rate (MDR) on certain UPI transactions, alleging that the move was influenced by pressure from the United States.
Congress general secretary in-charge communications Jairam Ramesh questioned whether the government’s decision was intended to give American card companies greater room to compete with UPI.
Ramesh said the US Trade Representative had earlier criticised UPI for being free and for reducing the market presence of international card networks such as Visa and Mastercard.
“Why 0.4% MDR? Is it because debit card MDR is also 0.4%?” Ramesh said in a post on X, questioning whether the proposed rate would help US card companies compete with the Indian digital payments platform.
He also questioned the government’s argument that the measure would help make the UPI ecosystem financially sustainable. According to Ramesh, the estimated annual cost of operating the entire system is around Rs 20,000 crore.
The Congress leader also linked the issue to broader tensions between India and the United States. He pointed to proposed tariff measures in the US House of Representatives and restrictions affecting Indian immigrants, including changes concerning H-1B visa holders.
Ramesh alleged that the Modi government had accepted a US demand to end the zero-MDR regime for certain merchant transactions. Taking a political swipe at Prime Minister Narendra Modi, he described the move as “Narendra’s Ongoing Trump Appeasement”.
The criticism followed the government’s announcement that a 0.4 per cent MDR would apply from October 15 to merchant transfers above Rs 2,000 through UPI. However, the policy specifically excludes person to person transactions and small-value payments from the levy.
The Finance Ministry clarified that consumers would not be charged for making UPI payments. It said MDR is a fee within the merchant payment ecosystem and does not constitute a charge on customers using UPI.
The ministry also said individuals would continue to have unlimited free access to UPI, without monthly quotas, transaction-volume restrictions or tiered limits on free usage.
The decision has drawn criticism from opposition parties, with Congress leader Rahul Gandhi also alleging that the government had yielded to pressure from the United States.
The BJP rejected the allegations and accused the Congress of spreading misinformation. The party reiterated that MDR would not be imposed on consumers making UPI payments.
The debate centres on how the world’s largest real time payments ecosystem should be financed while retaining free access for individual users and ensuring that merchants and payment service providers can sustain the system.