The Indian National Congress has publicly criticized the government's recently introduced charges for Unified Payments Interface (UPI) transactions, labeling them a 'tax' on citizens. This strong opposition, however, contrasts with the prior actions of several prominent Congress Members of Parliament (MPs) who were part of a parliamentary committee that had advocated for a similar revenue model for UPI.
Parliamentary Committee Backed Tiered MDR
Five Congress MPs—P Chidambaram, Manish Tewari, Gaurav Gogoi, Kishori Lal, and K Gopinath—were present on August 12 when the Parliamentary Standing Committee on Finance adopted its report. The report explicitly called for a tiered Merchant Discount Rate (MDR) and a robust revenue framework for UPI, urging its swift notification and implementation. The minutes of this meeting recorded no dissent from the attending members.
The committee's rationale centered on ensuring the financial sustainability of the UPI ecosystem without perpetually burdening the government exchequer. It emphasized that establishing a viable revenue mechanism was critical for the long-term health of India's digital payment infrastructure.
New UPI Charges Explained
Following these recommendations, the government has now notified a new MDR framework for UPI transactions. Effective October 15, a 0.4% charge will apply to person-to-merchant (P2M) UPI payments exceeding Rs 2,000. This charge is to be borne by merchants, not consumers, and will be capped at Rs 300 for transactions valued at Rs 75,000 or more. Previously, UPI operated under a zero-MDR regime, with the government providing incentives to promote digital adoption.
Congress's Stance and NPCI's Justification
In a video message, Leader of the Opposition Rahul Gandhi condemned the new charges, asserting that they amount to a tax on every Indian and would divert funds. He specifically alleged that a significant portion of this money would go to the United States, urging the Prime Minister to reverse the decision.
The National Payments Corporation of India (NPCI), which manages UPI, has defended the introduction of MDR. NPCI stated that while government incentives were crucial for accelerating early digital adoption, they were intended as short-term bridge funding. Industry estimates indicate that maintaining UPI operations, including server bandwidth, fraud prevention systems, and bank technical support, costs approximately Rs 20,000 crore annually. NPCI argues that relying solely on fiscal budget allocations creates funding uncertainty and restricts long-term technology investments by banks and fintech companies. A commercial, threshold-based model, it maintains, provides reliable capital necessary for continuous technological innovation and system upgrades.