No US pressure in UPI MDR decision; NPCI circular offers no advantage to foreign credit cards: FinMin
The Department of Financial Services (DFS) issued the clarification in response to observations in the US Trade Representative's (USTR) 2026 report on the inability of US electronic payment service providers to participate in the UPI ecosystem, including credit transactions on UPI, on a level playing field with RuPay.
On Thursday, the Finance Ministry refuted claims that the United States exerted pressure to introduce a 0.4% Merchant Discount Rate (MDR) on select UPI payments. The Ministry's Department of Financial Services (DFS) clarified that the latest circular from the National Payments Corporation of India (NPCI) does not grant any advantage to foreign credit cards over RuPay on the Unified Payments Interface (UPI) platform.
The NPCI circular, issued on September 15, 2026, explicitly allows only the RuPay credit card for credit transactions on UPI, aiming to make it the preferred choice among Indian users. The DFS emphasized that the MDR introduction is not influenced by external factors and is a part of the existing policy framework designed to create a sustainable revenue framework for the digital payments ecosystem.
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