Finance Ministry rejects foreign influence claims over UPI MDR change

The Finance Ministry rejected claims that changes in UPI merchant discount rates were driven by foreign influence, saying India's digital payment policies are independently decided. It said UPI remains free for customers, while certain high-value merchant transactions attract charges

New Delhi: Finance Ministry on Wednesday debunked claims which suggested that the MDR change in the UPI ecosystem is due to foreign influence, stressing that India’s digital payments decisions are made independently.

Since its launch in 2016, UPI has grown into the world’s largest real-time interoperable payment system — entirely on India’s own terms, the ministry posted on social media platform X.

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Such claims are “false. India’s UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem,” it noted.

UPI processed 24.5 billion transactions in August 2026 alone. To keep this system self-sustainable, secure and innovative, a small fee on high-value merchant transactions helps fund better infrastructure and cybersecurity, support for small merchants in Tier III–VI towns and rural areas, and awareness and incentives to expand UPI adoption, according to the government.

“The new framework ensures resources from higher-value merchant transactions are reinvested to support small businesses and strengthen digital payments across the country,” the Finance Ministry said.

UPI continues to be free for customers. Sending money to friends, paying at shops, or scanning a QR code — all remain without charges.

“Person-to-Person transfers are always free, regardless of amount. Vendors earning up to Rs 1 lakh per month via UPI QR codes continue to enjoy zero charges. Over 95 per cent of merchant payments are below Rs 2,000 — these remain free,” said the ministry.

Only larger merchant transactions above Rs 2,000 attract a small fee (0.4 per cent) to be borne by merchants, far lower than credit card charges or other network charges.

Railways, fuel, telecom, bill payments and insurance have a flat fee of Rs 5 per transaction above Rs 2,000 and mutual fund and securities payments attract just 0.02 per cent, capped at Rs 300.

“Merchants cannot pass MDR costs to customers. UPI apps cannot levy platform charges,” the ministry further informed.