IndiaPosted at: Sep 16 2026 11:30AM

Ramesh questions UPI MDR move, links it to US pressure

New Delhi, Sep 16 (UNI) Congress general secretary in-charge communications Jairam Ramesh on Wednesday questioned the Narendra Modi government's decision to introduce a Merchant Discount Rate (MDR) on select UPI transactions, alleging that the move came amid mounting pressure from the United States and could potentially help American card companies compete with India's widely used digital payments system.
Ramesh's attack came a day after the government announced that a 0.4 per cent MDR will be levied from October 15 on specified person-to-merchant UPI transactions above Rs 2,000, with the charge capped at Rs 300 for transactions of Rs 75,000 and above. The government has maintained that person-to-person transactions will remain free and that around 96 per cent of merchant transactions will continue to be unaffected.
In a post on X, Ramesh linked the UPI decision to broader trade and immigration tensions between India and the United States. He pointed to the proposed US legislation providing for tariffs of up to 100 per cent on India and said the US House of Representatives was scheduled to vote on the measure, after its passage by the Senate.
“Tomorrow, the US House of Representatives votes on a Bill that introduces 100% tariffs on India. The US Senate has already approved this draconian law,” Ramesh said.
He also referred to what he described as the Trump administration's tougher approach towards Indian immigrants, citing increased H-1B visa costs and possible measures affecting visa holders who lose their employment. H-1B visas are widely used by Indian professionals, particularly in the information technology sector.
Against this backdrop, Ramesh alleged that the government had yielded to a US demand to dismantle India's zero-MDR framework for UPI.
“Here, the Modi Govt has given into a US demand to get rid of zero MDR and charge for UPI,” he said, referring to earlier criticism of India's zero-cost UPI model by the US Trade Representative and its implications for international card networks such as Visa and Mastercard.
Ramesh also questioned why the MDR had been fixed at 0.4 per cent. “Why 0.4% MDR? Is it because debit card MDR is also 0.4%? Is this being done to enable US card companies to compete with UPI?” he asked.
The government, meanwhile, has said the revised framework is aimed at creating a sustainable financial model for the UPI ecosystem without imposing charges directly on consumers. It has clarified that MDR is neither a tax nor a government levy, but a charge distributed among participants in the payments ecosystem.
The government has also maintained that the revised MDR regime covers only a limited category of merchant transactions and that the rate will remain lower than prevailing charges applicable to debit and credit card transactions.
Ramesh questioned the government's argument that MDR is required to ensure the financial sustainability of UPI. He cited an estimated annual cost of around Rs 20,000 crore for running the UPI ecosystem and argued that the amount is less than 10 per cent of the transfers made by the Reserve Bank of India to the union government in recent years.
He further questioned whether the new MDR structure can change the competitive dynamics between UPI and international card networks, particularly Visa and Mastercard.
Ending his post with a political attack on Prime Minister Narendra Modi's handling of US President Donald Trump, Ramesh wrote: “The PM has redefined NOTA— Narendra’s Ongoing Trump Appeasement.”
The controversy comes as the government seeks to balance the continued expansion of UPI with the financial costs of maintaining the country's digital payments infrastructure. Under the revised framework, eligible small merchants receiving up to Rs 1 lakh a month through UPI QR transactions will continue to remain outside the MDR regime, while person-to-person UPI payments will remain free.
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Tags: #Ramesh questions UPI MDR move # links it to US pressure

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