IndiaPosted at: Sep 16 2026 7:50PM


Finance Ministry rejects ‘external pressure’ claims over UPI charges

New Delhi, Sep 16 (UNI) The Finance Ministry on Wednesday debunked the “External Pressure” myth that India's decision to introduce a charge on certain high-value UPI merchant transactions was influenced by foreign pressure, saying the country's "UPI policy decisions were taken independently".
“Some claims suggest the change is due to foreign influence. India’s UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem,” the ministry said in a post on X.
The ministry reiterated that UPI would remain "free for consumers, with all person-to-person (P2P) transactions continuing to attract no charges, irrespective of the amount transferred." Payments to merchants up to Rs 2,000 and transactions covered under the zero-MDR framework for small merchants will also remain free.
According to the ministry's social post, small merchants receiving up to Rs 1 lakh per month through UPI QR codes will continue to enjoy zero MDR. It said approximately 96 per cent of merchant transactions would remain unaffected under the new framework.
Under the revised framework, “ Only larger merchant transactions above ₹2,000 will attract a nominal MDR of 0.4 per cent, which will be borne by merchants and is significantly lower than credit card and other network charges."
It said small merchants earning up to Rs 1 lakh per month through UPI QR codes would continue to be protected from charges, while more than 95 per cent of merchant payments below Rs 2,000 would also remain free.
"Transactions above Rs 2,000 in essential sectors, including railways, telecommunications, insurance, fuel and agricultural inputs, will attract a flat MDR of Rs 5 per transaction. Payments related to mutual funds, securities, stockbrokers and dealers will carry a lower MDR of 0.02 per cent, capped at Rs 300," it added.
The ministry said the MDR would be borne within the merchant-payment ecosystem and customers would not be charged. Banks have been advised to ensure that merchants do not pass the MDR cost on to customers, while UPI application providers have been "barred from imposing platform fees or hidden charges."
Since its launch in 2016, UPI has grown into a major real-time digital payments system. The ministry said UPI processed 24.5 billion transactions in August 2026.
Explaining the rationale for the framework, the ministry said the new framework aims to ensure its long-term sustainability and security by using revenue from high-value merchant transactions to fund better infrastructure and cybersecurity, support small merchants in Tier-III to Tier-VI towns and rural areas, and promote wider UPI adoption through awareness and incentives.
The new framework ensures resources from higher-value merchant transactions are reinvested to support small businesses and strengthen digital payments across the country, the ministry said.
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