Why Are MPs Alarmed by the New UPI Fee? Understanding the Controversy

Concerns Raised Over New UPI Payment Fees

New Delhi: On Wednesday, several Members of Parliament, primarily from the Opposition, voiced their apprehensions regarding the government's recent decision to impose a fee on UPI transactions exceeding Rs 2000 for merchants. They argue that this policy could adversely impact the entire population, labeling it as an 'anti-people' initiative.

Bhartruhari Mahtab, the Chairman of the Parliamentary Standing Committee on Finance, noted that the matter was raised during a committee meeting and may be revisited in future discussions.

RSP MP NK Premchandran, a committee member, emphasized that the government's fee on transactions above Rs 2000 would affect everyone in the country, stating, 'This is a completely anti-people decision.'

In a significant policy shift, the government announced on Tuesday that starting October 15, a 0.4% fee will be applied to UPI transfers over Rs 2000 made to merchants, marking the end of nearly six years of free UPI transactions. However, everyday person-to-person transactions and small payments will remain exempt from this charge.

The finance ministry clarified that customers will not incur any fees for these types of payments made via UPI, explaining that the Merchant Discount Rate (MDR) is a cost within the merchant payment framework, not a charge for customers. Additionally, individuals will still enjoy 'unlimited free usage' of UPI without any monthly limits, volume restrictions, or tiered caps on free transactions.