No question of rollback of 0.4% MDR charges on UPI transactions over ₹2,000: Top government official
Sources said the decision to impose MDR charges was taken in the larger interest of the UPI ecosystem and to strengthen its safety and security
Government officials have firmly stated that there is no possibility of reconsidering the introduction of 0.4% Merchant Discount Rate (MDR) charges on Unified Payments Interface (UPI) transactions over ₹2,000, effective October 15, 2026. A top official affirmed that the decision has already been made and there is no intent to reverse it.
The rationale behind imposing the MDR charges lies in bolstering the safety and security of the UPI ecosystem. This move, which is mirrored in practices adopted by other nations, was made during the inception of the UPI system in 2020, with the long-term objective of ensuring its financial self-sufficiency. The announcement has drawn significant criticism from various stakeholders, including merchants, shopkeepers, and opposition parties, who have dubbed the move as the "Modi Tax".
Opposition parties, including the Congress, have accused Prime Minister Narendra Modi of succumbing to U.S. pressure. In response to the backlash, the government has assured that it will provide incentives to promote further expansion in rural and semi-urban areas, while ensuring that the majority of payments remain free of charge.
Despite the controversy, the government defended its decision, emphasizing that establishing a viable revenue mechanism is crucial to maintain the financial sustainability of the UPI ecosystem without constantly burdening the government's coffers.
Written by urgent.news from The Hindu's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
