Is Modi's Government Yielding to US Pressure on UPI Charges? Congress Raises Alarm!

Congress Criticizes Government's UPI Fee Decision

New Delhi: On Wednesday, the Congress party accused the Indian government of capitulating to US demands regarding the Merchant Discount Rate (MDR) for UPI transactions. They claimed that Prime Minister Narendra Modi has effectively redefined NOTA to mean 'Narendra's Ongoing Trump Appeasement'.

Jairam Ramesh, Congress's general secretary for communications, questioned whether the government's decision to implement MDR was aimed at allowing US card companies to compete with UPI.

He highlighted that the US House of Representatives is set to vote on a bill imposing 100% tariffs on India, following the Senate's approval of this stringent legislation.

Ramesh also pointed out the Trump administration's crackdown on Indian immigrants, which includes increased costs for H-1B visas and potential deportation for jobless visa holders, primarily affecting IT professionals.

He stated, 'The Modi government has succumbed to US pressure to eliminate zero MDR and impose charges on UPI transactions. Earlier this year, the U.S. Trade Representative criticized UPI for being free and for sidelining Visa and Mastercard.'

Ramesh questioned the rationale behind the 0.4% MDR, asking if it was to align with the debit card MDR and whether it was intended to help US card companies compete with UPI.

He raised concerns about the sustainability of UPI, as claimed by the government, noting that the annual operational cost of the UPI ecosystem is approximately Rs 20,000 crore, which is less than 10% of what the Reserve Bank of India has transferred to the Union government in recent years.

Ramesh reiterated, 'The PM has redefined NOTA – Narendra's Ongoing Trump Appeasement.'

His comments followed the government's announcement of a 0.4% fee on merchant transfers exceeding Rs 2,000, effective from October 15, while ensuring that person-to-person transactions and small payments remain exempt from charges.

The finance ministry clarified that customers would not incur any fees for such payments via UPI, stating, 'MDR is a charge within the merchant payment ecosystem, not on customers making UPI payments.'

Additionally, individuals will enjoy 'unlimited free usage, with no monthly quotas, volume restrictions, or tiered caps on free UPI transactions.'

This carefully planned decision marks a significant shift for the world's largest real-time payments system, even as the government seeks to reassure millions of daily users.

The opposition has sharply criticized this move, with Congress leader Rahul Gandhi accusing Modi of once again yielding to American pressure. In response, the BJP accused Congress of spreading misinformation, asserting that the government has clearly stated that consumers will not face MDR charges.