Centre Rejects Foreign Influence Claims Over UPI MDR Charges, Says Digital Payments Policy Is Independent

The Centre has dismissed allegations that the introduction of Merchant Discount Rate (MDR) on select UPI transactions was influenced by foreign interests, stating that India’s digital payments policies are decided independently.

The Finance Ministry said the objective behind introducing MDR is to create a sustainable and inclusive digital payments ecosystem while ensuring that UPI remains affordable for consumers.

"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 ministry said.

MDR to apply only to specific merchant transactions

The clarification came after opposition parties alleged that the move was linked to concerns raised by the US over UPI’s impact on global card networks such as Visa and Mastercard.

From October 15, UPI merchant transactions above ₹2,000 will attract an MDR of 0.4%. The charge will be paid by merchants and will not apply to consumers.

For example, a merchant receiving a UPI payment of ₹10,000 will pay ₹40 as MDR. The fee has been capped at ₹300 per transaction.

The government said person-to-person (P2P) transfers will continue to remain free. It also advised banks to ensure that merchants do not transfer the MDR cost to customers.

"Sending money to friends, paying at shops, or scanning a QR code - all remain without charges," the Finance Ministry said.

Opposition raises concerns over UPI charges

The Congress has criticised the move, alleging that it could benefit international card companies and increase costs for consumers.

Rajya Sabha MP Jairam Ramesh questioned the rationale behind the 0.4% MDR rate and alleged that the decision could help foreign payment networks compete with UPI.

"Why 0.4% MDR? Is it because debit card MDR is also 0.4%? Is this being done to enable US card companies to compete with UPI?" Ramesh said.

The Congress has also argued that merchants may eventually pass on the additional cost to customers through higher prices.

The government, however, maintained that the MDR framework is aimed at strengthening UPI’s long-term sustainability without affecting everyday users.