Full Breakdown
Congress Accuses Modi Government of Opening Door to UPI Fees Above INR2,000
By Drooid · · How we work
Core Event
On September 15, 2026, Congress president Mallikarjun Kharge and Leader of the Opposition Rahul Gandhi alleged that the Narendra Modi government had “quietly opened the door” to imposing a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions exceeding INR2,000. The claim refers to a gazette notification issued on September 14 that bars banks and payment-system providers from charging for UPI or RuPay debit-card transactions up to INR2,000, while offering no explicit protection for higher-value payments.
Background & Context
The amendment to Section 10A of the Payment and Settlement Systems Act, 2007—passed during the Monsoon Session that ended on August 13—creates a legal framework for introducing MDR on electronic payments. Since January 2020, UPI has operated under a zero-MDR regime for person-to-merchant (P2M) transactions, with the government supporting the ecosystem through incentive schemes rather than fees.
Data & Statistics
- Transactions above INR2,000 represent roughly 4 % of P2M UPI volume but account for about two-thirds of total transaction value (2025-26 data).
- In FY 2025-26, more than 24,000 crore UPI transactions worth INR314 lakh crore were processed.
- Rahul Gandhi noted that the high-value segment comprises ?5 % of volume yet ?65 % of UPI’s total value.
Official Statements & Responses
Finance Minister Nirmala Sitharaman said any MDR would be levied on merchants, not end-users, and that the UPI and Services Steering Committee—headed by NPCI—has not set a rate. She said the measure is intended to fund infrastructure, innovation and security upgrades.
Union Minister of State for Social Justice and Empowerment Ramdas Athawale called the opposition’s allegations “baseless and untrue,” stating that the government has no proposal to impose a fee on transactions above INR2,000.
Criticism & Opposition
Congress leaders argue that the notification removes the statutory guarantee of free UPI for higher-value payments, exposing merchants to potential charges that could be passed on to consumers. They link the policy shift to pressure from U.S. payment companies that have opposed India’s zero-MDR model.
Conflicting Reports & Gaps
- Opposition claim: The amendment “opens the way for MDR” on transactions above INR2,000, potentially burdening consumers.
- Government position: No MDR rate has been set; the notification merely removes the exemption for transactions above INR2,000, and any future charge would apply only to merchants.
- Athawale’s statement: Allegations of an imminent fee are “false,” indicating no current decision.
The disparity between the opposition’s interpretation and the government’s assertion creates uncertainty about the eventual cost structure for UPI users.
Why It Matters
If an MDR is introduced for high-value merchant transactions, merchants may raise prices to offset the cost, shifting the burden to consumers—particularly amid near-10 % wholesale inflation. The debate also touches on India’s digital-payments strategy and its relationship with foreign payment firms.
Timeline
- August 6, 2026 – Congress warned that the government might use new laws to start charging for UPI.
- August 13 – Amendment Bill passed in Parliament during the Monsoon Session.
- September 14 – Gazette notification issued, protecting UPI transactions up to INR2,000 from charges.
- September 15, 2026 – Congress leaders publicly accuse the government of paving the way for UPI fees.
