Congress Accuses Government of Yielding to US Pressure on UPI Charges

The Congress on Wednesday accused the government of conceding to a United States demand by ending zero Merchant Discount Rate (MDR) on UPI and introducing a charge on the platform, with its communications chief Jairam Ramesh dubbing the development "Narendra's Ongoing Trump Appeasement".

Mr. Ramesh questioned whether the change was intended to let American card companies compete with UPI, asking why the rate had been set at 0.4% and whether that mirrored the existing debit card MDR. He also asked whether the levy would genuinely make UPI "sustainable", as the government has claimed.

He argued that running the entire UPI ecosystem costs an estimated ₹20,000 crore a year, which he said was under a tenth of the sums the Reserve Bank of India has transferred to the Union government in recent years to present healthy public finances. In a separate post, he described the MDR decision as a "2017 GST Redux".

Mr. Ramesh further pointed to mounting pressure from Washington, noting that the U.S. House of Representatives was due to vote on a Bill imposing 100% tariffs on India, which the Senate has already passed. He also cited a crackdown on Indian immigrants, higher H-1B visa costs and the prospect of immediate deportation for holders who lose their jobs, most of whom he said are IT professionals. He added that the U.S. Trade Representative had earlier this year criticised UPI for being free and for driving out Visa and Mastercard.

The remarks came a day after the government introduced a 0.4% fee on transfers above ₹2,000 to merchants through UPI from October 15, while shielding everyday person-to-person payments and small transactions. The finance ministry said customers would not bear any charge for such payments, describing MDR as a charge within the merchant payment ecosystem rather than on consumers. It said individuals would retain unlimited free usage, with no monthly quotas, volume restrictions or tiered caps on free UPI transactions.

The calibrated step marks the end of an era for the world's largest real-time payments system, even as the government sought to reassure its hundreds of millions of daily users. The move has drawn sharp criticism from opposition parties, with the Congress calling it a "Modi tax" and Rahul Gandhi alleging that Prime Minister Narendra Modi was "compromised" and "once again surrendering" to American pressure. The BJP has rejected the charge as "fake news", stressing that the government had made clear MDR would not be levied on consumers.