Story perspectives

India sets 0.4% MDR for UPI over INR2,000

By Drooid · Sep 17, 2026, 4:00 AM UTC · How we work

Left

US firms benefit

The Indian government announced a 0.4% merchant discount rate on UPI transactions above INR2,000, effective 15 October 2026.
Critics, Congress leaders Mallikarjun Kharge and Rahul Gandhi, say the fee will raise costs during inflation and enrich U.S. firms, calling it a “payments tax”.
Supriya Shrinate said PhonePe (72% Walmart stake) and Google Pay control roughly 86% of UPI.
Finance ministry said merchants cannot pass the MDR cost to customers.

Right

Gandhi labels tax

India announced a 0.4 % discount on UPI transactions above Rs 2,000, starting 15 Oct 2026.
Opposition leader Rahul Gandhi called the fee a “UPI tax” and blamed U.S. President Donald Trump’s pressure.
BJP President Nitin Nabin defended the MDR as essential for the country’s development progress.
The parliamentary finance committee backed the MDR as a step, capping it at Rs 300 for transactions over Rs 75,000, payable by merchants, with transfers up to Rs 2,000 free.

Center

Domestic Fee Defense

India’s government announced a 0.4% merchant discount rate on UPI transactions above INR2,000, effective 15 October 2026.
The Centre asserts the fee is a domestic, non-tax measure to sustain UPI and rejects claims of foreign pressure.
Finance Ministry posted on X that foreign-influence allegations are false and UPI policy is independent.
MDR revenue will fund NPCI and banks for resilience, cybersecurity, fraud prevention, and UPI expansion.

Blindspot

The finance ministry said essential services such as railways, fuel, telecom, bill payments and insurance will be charged a flat INR5 fee per UPI transaction above INR2,000.
Within this story's sources, this angle appears mainly in Left-leaning coverage and receives less attention in Center- and Right-leaning coverage.

History

Historical Context

After NPCI formed in 2009, the RBI launched UPI on 11 April 2016, recording 2.5 billion transactions that year and spurring rapid digital adoption. A Lok Sabha bill in August 2026 authorized a 0.4% merchant discount rate on payments above INR2,000, prompting Rahul Gandhi and Mallikarjun Kharge to label it a “payments tax.” The fee now threatens merchant costs and UPI growth.

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US firms benefit

The Indian government announced a 0.4% merchant discount rate on UPI transactions above INR2,000, effective 15 October 2026.
Critics, Congress leaders Mallikarjun Kharge and Rahul Gandhi, say the fee will raise costs during inflation and enrich U.S. firms, calling it a “payments tax”.
Supriya Shrinate said PhonePe (72% Walmart stake) and Google Pay control roughly 86% of UPI.
Finance ministry said merchants cannot pass the MDR cost to customers.

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