Published Sep 16, 2026 | 4:45 PM ⚊ Updated Sep 16, 2026 | 4:46 PM
The UPI logo. (Supplied)
The BJP-led central government’s decision to allow Merchant Discount Rate (MDR) charges on specified UPI payments above Rs 2,000 has invited widespread criticism, including from its own foot soldiers.
The Union Finance Ministry’s notification came on September 14, over a month after Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026 by voice vote in the Lok Sabha, without any discussion. The Rajya Sabha passed it too, but only after an over two-hour discussion.
In the official communication, the Finance Ministry said banks and other service providers must not levy any charges on UPI payments below Rs 2000. A day later, the National Payments Corporation of India (NPCI) announced that merchants receiving payments above Rs 2000 will have to pay a charge of 0.4 % to respective banks and payment processors. Small merchants earning up to Rs 1 lakh a month through UPI payments have been exempted, while person-to-person transactions also remain free. The NPCI also capped the maximum charge that can be levied by banks and payment processors at Rs 300.
The government has pegged the decision as a necessity, maintaining that reliance on subsidies to run the UPI platform would not be enough for the next wave of growth in the online payment sector. “A balanced framework is required to ensure that UPI remains robust, inclusive, and future-ready,” the ministry had said in a statement in August.
However, even its own ardent supporters aren’t convinced.
Also Read: As UPI gets ready for its first charges, the real revolution is not the transaction count
Rishi Begree, one of BJP’s prominent social media warriors known for repeatedly spreading misinformation through online platforms, urged the government to let UPI payments be free while stressing that the zero MDR policy was “never a freebie.”
“Every UPI transaction leaves a data trail. Digital payments pulled crores of cash sellers into GST nets that did not exist before. The subsidy is partly self-funded by the tax base it built. Zero MDR was never a freebie. It was a pricing strategy to formalise the economy, and it worked,” he said in a post on X.
NPCI spends ₹1000 crore per annum to maintain the UPI infrastructure.
Meanwhile, UPI has saved the Nation a sum of ₹5000 crore in printing currency of lower denominations and merchant fees.
The reason why the Modi government should keep UPI free of any charges.
— Rishi Bagree (@rishibagree) September 16, 2026
“Let UPI be free, as it’s cheaper than printing cash and helps increase tax collection,” Begree said.
In an opinion piece published in The Print, Ashwani Mahajan, National Co-Convener of the Swadeshi Jagran Manch associated with the RSS, argued that UPI was a public good and should not be used as a profit-generating mechanism. He warned that the proposed MDR could adversely impact small businesses while also repeating the Congress criticism that the move could benefit foreign card companies.
Also Read: Towards a sustainable UPI: How India’s digital payment revolution can reinvent itself
The Opposition Congress’s first reaction was ‘we told you so’. Congress leader Jairam Ramesh repeated his allegation that the government’s move was an attempt to please US President Donald Trump by removing challenges for US-based companies. He also warned that the Rs 2000 cap set now by the government could be changed in the future.
Leader of Opposition in Lok Sabha Rahul Gandhi reiterated his charge that Prime Minister Narendra Modi has been compromised and surrendered to American pressure.
“American payment companies have long opposed India’s zero-MDR policy. Now, the Modi government has opened the path to changing the policy in exactly that direction,” he said in a post on X.
Trinamool Congress (TMC) leader Mahua Moitra pulled up the Finance Ministry’s statement from over a year ago, where it dismissed claims that charges might be imposed for UPI payments.
“Just over a year ago @FinMinIndia rubbished claims of MDR charges as “false, baseless & misleading” & “sensation-creating speculation”. Nobody, but nobody does lies, lies & more lies better than @BJP4India‘s government,” she wrote on X.
BharatPe co-founder Ashneer Grover dismissed the government’s claim regarding the necessity of such a move, arguing that the banks are already reaping crores in profit and don’t need another profit-generating mechanism that puts common citizens in trouble.
“Banks are sitting on ₹2 lakh crore in profits. Any charges on UPI is just tax collection from Indian citizens by the government,” he said.
Brokerages including Goldman Sachs have estimated that the move could create a Rs 20,600 crore industry revenue pool.
Grover, in a separate post, pointed out that the NPCI, which runs the UPI platform, has ₹6,119 crore in cash on its balance sheet and a pre-tax operating profit of ₹1,900 crore. The government earned Rs 1000 crore in taxes from NPCI, the former Managing Director of BharatPe posted while slamming the move.
(Compiled by Fayisa CA)
