The Centre has “quietly opened the door” to imposing fees on UPI transactions above ₹2,000, Congress leader Rahul Gandhi alleged on Tuesday. Merchants could eventually pass the cost on to consumers, the Lok Sabha Opposition leader said.
His remarks came a day after the Centre notified changes under the Payment and Settlement Systems Act and clarified that no charges can be imposed on UPI transactions of up to ₹2,000.
On X, Rahul Gandhi said transactions above ₹2,000 may account for only about 5% of UPI transactions by volume but represent nearly 65% of their total value. He said that even if customers were not directly charged, merchants could recover the fee by increasing prices.
“The government says no fees will be charged to customers. But where will the fees imposed on shopkeepers ultimately come from?” Gandhi said, alleging that this was aimed at changing India’s zero-MDR policy.
He also accused the Prime Minister Narendra Modi government of responding to pressure from American payment companies.
{{/usCountry}}He also accused the Prime Minister Narendra Modi government of responding to pressure from American payment companies.
{{/usCountry}}"American payment companies have long opposed India's zero-MDR policy. Now, the Modi government has opened the path to changing the policy in exactly that direction. Just like with the US Trade Deal, Compromised PM Modi is once again surrendering to American pressure," Rahul Gandhi wrote on X.
Kharge, Khera react
Congress president Mallikarjun Kharge alleged that the government changed its “no fees on UPI” policy to allow charges on transactions above ₹2,000.
He questioned reports that a ₹5,000 transaction could attract a fee of ₹25 and a ₹10,000 transaction up to ₹50. Any additional burden on merchants would eventually be passed on to consumers through higher prices, he added.
“Instead of providing relief to the inflation-weary public, the Modi government is searching for a new way every day to rob their pockets!!” Kharge said on X.
Congress leader Pawan Khera also accused the government of bowing to US pressure over India’s zero-MDR regime.
“There was pressure coming from the Americans on the MDR regime of India. And again, we have surrendered before Americans, again we are destroying our home-grown digital payment ecosystem under pressure from the US. Why?” he told PTI.
What the government has changed
The Centre's Monday notification covers UPI payments up to the ₹2,000 threshold as well as payments made through RuPay debit cards. It says banks and payment system providers cannot impose charges, directly or indirectly, on people making or receiving payments through these modes.
The change follows Parliament’s passage of the Taxation and Other Laws (Amendment) Bill, 2026.
Finance minister Nirmala Sitharaman earlier said in the Rajya Sabha that the amendment was only an “enabling provision” and did not impose any tax or transaction charge on UPI users.
She also said street vendors, cab drivers, kirana stores and small merchants would not face such charges. Any fee that may eventually be introduced for eligible transactions, she said, would be paid by merchants rather than customers.
What happens to UPI payments above ₹2,000?
The amendment does not itself introduce a fee on UPI payments above ₹2,000. Instead, it removes the earlier legal provision that prevented banks and payment service providers from charging Merchant Discount Rate (MDR) on UPI transactions.
This means the government has created the legal framework under which MDR could be introduced for certain merchant transactions in the future. The final decision on whether MDR should be imposed, and on which transactions, is yet to be taken.
What is MDR?
MDR is a fee paid by a merchant to banks or payment companies for processing a digital payment. Under the existing UPI system, merchants have generally not paid MDR since the zero-MDR policy was introduced in 2020.
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The government has instead provided financial incentives to banks and other participants to help cover the cost of running the UPI ecosystem.
Sitharaman said the UPI & Services Steering Committee, headed by the National Payments Corporation of India (NPCI) and including major banks and leading UPI apps, would consider whether MDR should be introduced and determine its scope and structure.