There is no question of a rethink on the issue of imposition of 0.4% MDR charges on Unified Payments Interface (UPI) transactions over ₹2,000, government sources said on Wednesday (September 16, 2026).
It is not a charge on customers making UPI payments. He argued that the fee was not justified by the costs involved. “UPI transaction fee is most unfortunate. It’s demeaning an achievement of Bharat, which has global appeal. Payments between individuals and smaller merchant transactions will not attract the fee.
A top official, when asked whether the government was considering rolling back the proposed Merchant Discount Rate charges on UPI transactions above ₹2,000, to be implemented from October 15, said a decision has been taken and there was no question of reversing it. The decision to levy charges, as prevalent in other countries, was taken at the time of introduction of UPI system in 2020, sources said, adding that new the MDR framework will make UPI self-sustainable. Defending the decision, the government on Tuesday (September 15, 2026) said it will also give incentives for further expansion in rural and semi-urban areas and maintain competitiveness, while ensuring that the large majority of payments remain free of charge. The panel had flagged that the government was providing roughly ₹2,000 crore a year to support the incentive scheme built around the zero-MDR policy. Earlier reporting noted: RSS affiliate opposes proposed MDR on UPI transactions above ₹2,000 Ashwani Mahajan, co-convener of the Swadeshi Jagran Manch (SJM), the economic wing of the Rashtriya Swayamsevak Sangh (RSS), on Wednesday (September 16, 2026) raised concerns about the government’s proposed Merchant Discount Rate (MDR) on UPI transactions above ₹2,000 , calling for the move to be reconsidered. Earlier reporting noted: The government has proposed a 0.4% MDR on merchant payments above ₹2,000 through UPI from October 15.
Policymakers have failed to factor in reduced logistics costs due to UPI, making Bharat more competitive,” he said.
Sources said the decision to impose MDR charges was taken in the larger interest of the UPI ecosystem and to strengthen its safety and security. “Customers will not be required to pay any charge when making such payments through UPI,” the finance ministry said in a statement, adding, “MDR is a charge within the merchant payment ecosystem. Also, individuals will continue to have “unlimited free usage, with no monthly quotas, volume restrictions or tiered caps on free UPI transactions”, it said. Mahajan said there was little reason for banks to seek an MDR on UPI, pointing out that the digital payments system had helped bring down their costs in terms of ATMs and other infrastructure.
Earlier reporting noted: In a post on X, Mr.
Some Opposition parties, including the Congress, have accused Prime Minister Narendra Modi of succumbing under the U.S. pressure.
