The Indian government has introduced a 0.4% fee on UPI merchant transactions exceeding ₹2,000, sparking a political debate with the Congress party. Government officials countered Congress's criticism by pointing to the support for a tiered Merchant Discount Rate (MDR) and revenue framework for UPI from Congress MPs on the Parliamentary Standing Committee on Finance. The committee's report, adopted without dissent from present Congress members, highlighted the necessity of such a framework to avoid over-reliance on government subsidies and ensure investments in payment infrastructure. The new fee, effective October 15, is intended to move towards a self-sustaining digital payments ecosystem, a move the Finance Ministry insists is an independent policy decision and not under foreign influence.

The Indian government has introduced a 0.4% fee on UPI merchant transactions exceeding ₹2,000, sparking a political debate with the Congress party. Government officials countered Congress's criticism by pointing to the support for a tiered Merchant Discount Rate (MDR) and revenue framework for UPI from Congress MPs on the Parliamentary Standing Committee on Finance. The committee's report, adopted without dissent from present Congress members, highlighted the necessity of such a framework to avoid over-reliance on government subsidies and ensure investments in payment infrastructure. The new fee, effective October 15, is intended to move towards a self-sustaining digital payments ecosystem, a move the Finance Ministry insists is an independent policy decision and not under foreign influence.

The Indian government has introduced a 0.4% fee on UPI merchant transactions exceeding ₹2,000, sparking a political debate with the Congress party. Government officials countered Congress's criticism by pointing to the support for a tiered Merchant Discount Rate (MDR) and revenue framework for UPI from Congress MPs on the Parliamentary Standing Committee on Finance. The committee's report, adopted without dissent from present Congress members, highlighted the necessity of such a framework to avoid over-reliance on government subsidies and ensure investments in payment infrastructure. The new fee, effective October 15, is intended to move towards a self-sustaining digital payments ecosystem, a move the Finance Ministry insists is an independent policy decision and not under foreign influence.

Amid the growing political row over the government’s decision to introduce a 0.4 per cent fee on certain UPI merchant transactions, the government on Wednesday questioned the Congress’s criticism, arguing that its own MPs on the Parliamentary Standing Committee on Finance had supported the move.

The committee had called for a tiered Merchant Discount Rate (MDR) and revenue framework for Unified Payments Interface (UPI) transactions in August.

According to a government functionary, five Congress MPs — P. Chidambaram, Manish Tewari, Gaurav Gogoi, Kishori Lal and K. Gopinath — were present when the committee adopted the report, with no dissent recorded in the published minutes, PTI reported.

“Why is Rahul Gandhi opposing something his own MPs, including former finance minister P Chidambaram and former minister in the UPA government Manish Tewari, supported within the parliamentary panel?” the official was quoted as saying.

The government’s reaction came after Rahul Gandhi, the Leader of the Opposition in the Lok Sabha, launched a sharp attack on the decision to levy a fee on UPI merchant transactions above ₹2,000.

Gandhi alleged that Prime Minister Narendra Modi had decided to “prostrate” before US President Donald Trump and give a huge amount of money to the US.

The parliamentary committee, headed by BJP MP Bhartruhari Mahtab, had noted in its report that statutory provisions now allow for calibrated MDR on high-value UPI transactions. However, any delay in notifying and operationalising such a framework would leave payment service providers heavily dependent on government subsidies, potentially affecting investments in cybersecurity, fraud prevention and network infrastructure, it said.

“The Committee observe that while UPI is expected to process up to 150 billion transactions per month and add 600 million new users, the current government incentive covers merely 11 per cent of the industry's actual costs and 14 per cent of potential MDR collections, creating a structural funding gap impacting long-term infrastructural investment,” the report said.

The government on Tuesday announced a 0.4 per cent fee on UPI transactions of more than ₹2,000 made to merchants, effective October 15. Person-to-person transactions and payments below ₹2,000 will remain outside the charge.

The government has rejected calls to roll back the decision and dismissed allegations that the move was made under external pressure.

“Some claims suggest the change is due to foreign influence. This is false. India's UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem,” the Finance Ministry said in a social media post.