MDR on UPI will hit businesses, not users: FM Nirmala Sitharaman hits back at Congress' Jairam Ramesh

Finance Minister Nirmala Sitharaman has refuted Congress leader Jairam Ramesh's claim that the new bill would eliminate free UPI transactions for regular users. In response to Ramesh's post on X, Sitharaman asserted that any future Merchant Discount Rate (MDR) would only impact businesses, not end-users. The minister dismissed Ramesh's allegations as "nonsense" and clarified that the MDR's impact is solely on merchants, not customers, with the proceeds earmarked for banking and fintech infrastructure, innovation, and security enhancements. These benefits, she argued, would ultimately benefit all UPI users.

Sitharaman emphasized that no final decision on the MDR has been made yet. The NPCI's UPI and Services Steering Committee, chaired by the government, is set to decide on the matter following the passage of the Taxation and Other Laws (Amendment) Bill, 2026, which seeks to amend Section 10A of the Payment and Settlement Systems Act, 2007.

The government plans to introduce amendments to the IT Act to levy the MDR on UPI transactions, a demand long-standing within the payments industry. ET had previously reported on July 16 that the government may reintroduce the MDR for large merchants, pegging it between 5-7 basis points, if the bill passes.

Critiquing the Congress, Sitharaman suggested that the matter could have been addressed in Parliament had the party cooperated when the bill was introduced. She took particular issue with Ramesh's argument that the bill removes the statutory guarantee that made UPI fee-free, dismissing the government's justification as "completely incorrect" based on the RBI's Rs 2.86 lakh crore surplus transferred to the Centre in 2025-26, which she maintained demonstrated that transaction fees were not essential.