The Indian government has rejected demands to withdraw a 0.4% merchant discount rate on certain UPI transactions.
Reader brief
Through the Reader lens: The Indian government has firmly rejected demands to withdraw a newly introduced 0.4% Merchant Discount Rate (MDR) on high-value UPI transactions. This policy shift ends the zero-cost structure for large digital payments, directly increasing processing costs for merchants handling significant transaction volumes. The Ministry of Finance defends the MDR as an independent regulatory decision, explicitly dismissing political allegations of foreign influence. Conversely, political critics and opposition groups argue the fee places an undue burden on businesses and are pressing for its immediate rollback. Moving forward, the market will watch how merchants absorb these new costs and whether consumers shift back to cash or alternative payment methods for large purchases.
What to watch next
- Monitor merchant adoption and potential surcharges on high-value UPI payments.
- Track political opposition efforts to force a legislative rollback of the MDR.
- Watch for shifts in consumer payment preferences toward cash or credit cards.
What was said7
Attributed, verbatim. Every quote is checked against the article it came from. One that does not match is not shown.
Jyotiraditya Scindia
1 quote“Under the rules that have been introduced, no merchant can pass this charge on to any customer. If they do so, it will be outside the legal framework.”
In the article
…was taken when the UPI system was introduced in 2020 and that the new framework will make it self-sustainable. Communications minister Jyotiraditya Scindia clarified that the charge will not be imposed on customers. " Under the rules that have been introduced, no merchant can pass this charge on to any customer. If they do so, it will be outside the legal framework. " The assertion came amid criticism from traders, shopkeepers and political parties, with govt insisting that only 4% of the transactions will be impacted and person-to-person transfers will not face any…
Monty Sehgal
1 quote“With wafer-thin margins, not revised in line with inflation since 2017, it is very difficult for petrol dealers to incur any such charges”
Nithin Kamath
1 quote“And if we can't pass the UPI charge on to the customer, there is essentially no limit to the cost a customer can impose on a broker without generating any revenue.”
Sameer Nigam
1 quote“The reality is 96% of transactions will bear no MDR. Customers will have 100% of payments free. Merchants will have 96% of payments free”
Ashok Kumar Lahiri
1 quote“businesses must find ways to become self-sustaining rather than depend on govt subsidies”
Ministry of Finance
1 quote“Some claims suggest the change is due to foreign influence. This is false. India’s UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem”
In the article
…Gandhi and other opposition leaders who said that the government succumbed to US pressure in making the decision. HT learnt that the changes to the UPI regime were also mentioned in the Cabinet meeting on Wednesday. “ Some claims suggest the change is due to foreign influence. This is false. India’s UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem ,” the finance ministry said in a post on X. Also Read | 'This is false': Govt rejects 'foreign influence' charge in UPI merchant fee row Since its launch in 2016, UPI has grown into the world’s largest real-time…
Rahul Gandhi
1 quote“Modi ji has a completely different concept. He’s neither left nor right; he has decided to lie down straight and prostrate himself in front of Donald Trump. He’s put a tax on every single Indian person by taxing UPI and giving a huge amount of money to the United States.”
In the article
…the Opposition wasn’t impressed. In a video message posted on X, Gandhi said, “Indira ji was once asked whether she leans left or right, and her response was, ‘I don’t lean left, I don’t lean right, I stand straight.’ Modi ji has a completely different concept. He’s neither left nor right; he has decided to lie down straight and prostrate himself in front of Donald Trump. He’s put a tax on every single Indian person by taxing UPI and giving a huge amount of money to the United States. Modi ji, please stop lying down in front of the United States. Have a spine, stand up and take back the UPI tax.” Trinamool Congress Rajya Sabha floor leader Derek O’Brien said “Nothing new. Say one thing in…
Related coverage
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So what3
Who is affected first and what likely follows, with a direction and a horizon. Extracted from the reports, never invented.
- Merchants increased processing fees· immediate
- Payment Service Providers billing system updates· days
- Indian Government digital payment revenue· longer
Sources2
- [1]The Times of Indianeutral'No rethink': Govt firm on UPI merchant fee amid rollback demands
- [2]Hindustan TimesneutralNo foreign influence in UPI fee: Govt clarifies amid Opposition outcry over ‘US pressure’