Stage being set for levying UPI transaction fee: Congress slams government

The Congress on Tuesday raised questions over the government's notification on UPI transactions, claiming that stage is clearly being set for people to pay a fee for such transactions and asking whether this is being done to open digital payments for American firms to "appease" US President Donald Trump.

The opposition party alleged that the government has yet again shown complete lack of honesty and transparency and has broken the trust of users.

Congress questions UPI fee notification

The opposition party's attack came after the government directed banks and payment system providers not to levy charges on Unified Payments Interface (UPI) transactions of up to Rs 2,000 or on payments made through RuPay debit cards.

However, the government has not specified whether charges would be applicable to transactions above Rs 2,000, to be paid by merchants. So far, there has been no charge on UPI transactions, irrespective of the amount.

Reacting to it, Congress general secretary in-charge communications Jairam Ramesh said, "Just as we warned on August 6, 2026 to which the Hon'ble FM herself had deemed it fit to respond, the Modi Government is now using new laws bulldozed through Parliament to start the process of charging for UPI."

"A notification has just been issued under the amended Payment and Settlement Systems Act, 2007 that prohibits banks and providers from charging only for UPI transactions under Rs 2000. But there is NO explicit protection for any transaction above this cap," Ramesh said on X.

What does the government notification say?

As per a gazette notification dated September 14, no bank or system provider would impose, directly or indirectly, any charge on a person making or receiving a payment through RuPay debit card or a UPI transaction of up to Rs 2,000.

The notification follows an amendment to Section 10A of the Payment and Settlement Systems Act, 2007, which provides an enabling framework for imposing a Merchant Discount Rate (MDR) on UPI and other notified electronic payment modes.

The amendment Bill was passed by Parliament during the Monsoon Session, which concluded on August 13, 2026.

Government explains rationale for MDR

Following the passage of the Bill, the government said the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), would decide on MDR rates.

The government said rising transaction volumes require continuous investment in cybersecurity, fraud prevention and infrastructure. It argued that charges were needed to support market expansion and make the system financially self-sustaining.

It also said greater competition would require more companies to expand their operations, while relying only on subsidies would not be viable for the next phase of growth.

Sitharaman says MDR applies to merchants

Finance Minister Nirmala Sitharaman had earlier said MDR on digital transactions applies to merchants and not customers. She said the charge would help banks and fintech companies invest in infrastructure and security.

Replying to Ramesh, Sitharaman had said, "Before spreading a canard, @Jairam_Ramesh ji, please consider this: Merchant Discount Rate (MDR) applies only on the merchants and not on the end users/customers. It will support the Banks & Fintech to invest more on infrastructure, innovation & security. All users of UPI will reap the benefits of this investment."

Congress had raised UPI concerns earlier

The latest remarks follow Congress' criticism last month of the Taxation and Other Laws (Amendment) Bill before its passage.

Ramesh had alleged that the legislation removed the statutory guarantee keeping UPI transactions free and could pave the way for MDR charges to be expanded in the future. He had also questioned whether the move was linked to opening India's digital payments sector to American businesses.

UPI is operated by the National Payments Corporation of India (NPCI), an initiative of the Reserve Bank of India (RBI) and the Indian Banks' Association.