Govt holds firm on UPI MDR as Opposition mounts pressure for rollback

Finance Ministry rejects claims of US pressure behind UPI MDR, as Opposition parties and trader groups demand reconsideration of the new merchant fee

The finance ministry on Wednesday asserted that policy decisions are made independently, with the goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem, even as there was a clamour for a rollback of the decision to impose a merchant discount rate (MDR) of 0.4 per cent on transactions worth over ₹2,000 made via UPI.

Ashwani Mahajan, national co-convenor of the Swadeshi Jagran Manch (SJM), the Rashtriya Swayamsevak Sangh (RSS)-affiliated think tank, said the government should reconsider the move, calling it “most unfortunate”.

In a video posted on X, Rahul Gandhi, Leader of the Opposition in the Lok Sabha, demanded that the levy be rolled back. Gandhi alleged that the government has put a tax on every single Indian by taxing UPI and giving a huge amount of money to the US.

Seeking to debunk “the myth of external pressure,” the Union Ministry of Finance said since its launch in 2016, the UPI has grown into the world’s largest real-time interoperable payment system “entirely on India’s own terms.”

The finance ministry said that UPI processed 24.5 billion transactions in August 2026 alone. “To keep this system self-sustainable, secure and innovative, a small fee on high-value merchant transactions helps fund better infrastructure and cybersecurity, support for small merchants in tier III–VI towns and rural areas and awareness and incentives to expand UPI adoption,” it said.