India Opposition Slams New UPI Merchant Fee as US Concession

The Government of India announced a 0.4% Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions exceeding Rs 2,000 for merchants, effective October 15, 2026. The Ministry of Finance clarified that the fee applies only to the merchant ecosystem and that person-to-person transactions and small payments remain free for customers.

Leader of Opposition Rahul Gandhi and other Congress leaders condemned the move, characterizing it as a "Modi tax" and a surrender to American imperialism. Gandhi alleged the policy was designed to benefit US President Donald Trump and American card networks like Visa and Mastercard by allowing them to compete with UPI. Congress President Mallikarjun Kharge further claimed the government capitulated to Washington following threats of up to 100% US tariffs on Indian goods.

The government rejected these claims, asserting that the Parliamentary Standing Committee on Finance—including five Congress MPs—had previously backed a tiered revenue framework on August 12 to address a structural funding gap. Officials noted that the government's Rs 2,000-crore allocation covers only 11% of the industry's estimated Rs 20,700-crore operational costs.

Congress MPs Gaurav Gogoi and Manish Tewari countered that while a general framework may have been discussed, no specific proposal regarding the 0.4% rate or the October 15 implementation was ever presented to the committee. Tewari accused the government of mischaracterizing confidential committee proceedings to score political points. Union Minister Ramdas Athawale dismissed the allegations of US influence as baseless.