‘This Is False’: Govt Rejects Foreign Influence Claim Over New UPI Merchant Fee

The Indian government has dismissed accusations that foreign pressure influenced its decision to implement a Merchant Discount Rate (MDR) on certain Unified Payments Interface (UPI) merchant transactions. The government maintains that its digital payment policies are decided independently. Congress leader Rahul Gandhi accused the government of bowing to US President Donald Trump's influence, burdening Indian citizens with a 'UPI tax'.

However, the government clarified that UPI remains free for consumers, with no charges on person-to-person (P2P) transfers, irrespective of the transaction amount. Small merchants earning up to Rs 1 lakh a month through UPI QR codes also face zero charges, and merchant payments up to Rs 2,000 will remain free. Higher-value merchant transactions, above Rs 2,000, will be subject to a 0.4% MDR, which will be borne by the merchants.

This fee is lower than credit-card charges and other network fees. Approximately 96% of person-to-merchant transactions will remain unaffected under the new framework. The government introduced the fee to ensure the UPI ecosystem remains sustainable, secure, and innovative, reinvesting revenue from higher-value transactions to support small businesses and strengthen digital payments infrastructure.