The Congress has criticised the central government over changes to the Unified Payments Interface payment system, particularly the introduction of a Merchant Discount Rate on selected high-value merchant transactions. The opposition party has questioned the timing and rationale of the move and alleged that the government is responding to pressure from the United States.
The allegation has been made by Congress leaders and should be understood as an opposition claim rather than an established fact. The government and payment authorities have presented the changes as part of a new framework for supporting the sustainability and development of the digital payments ecosystem.
According to the new framework announced by the National Payments Corporation of India, a Merchant Discount Rate of 0.4 percent will apply to eligible person-to-merchant UPI transactions above Rs 2,000 from October 15, 2026. The rate will be subject to a maximum charge of Rs 300 for general merchant transactions of Rs 75,000 and above. Certain sectors, including railways, telecommunications, insurance and fuel, will have a separate fixed charge structure for eligible transactions.
The change does not mean that consumers will have to pay a separate fee every time they use UPI. The government has specifically stated that consumers making UPI payments will not face transaction charges. Person-to-person transactions will also continue to remain free.
The distinction between consumers and merchants is therefore central to understanding the new policy. The Merchant Discount Rate is charged within the payment ecosystem in connection with eligible merchant transactions. The government has said that the charge should not be passed on to consumers as a separate UPI payment fee.
The new framework also includes provisions intended to protect smaller merchants. According to the reported structure, eligible small merchants with monthly QR-based UPI receipts below Rs 1 lakh will be exempt from the MDR. UPI payments in certain rural and semi-urban categories will also continue without the new charge.
Congress has nevertheless raised concerns about the broader implications of introducing charges into a payment system that has been widely used as a low-cost digital payment method. Party leaders have questioned whether the new arrangement could eventually create additional costs for businesses or consumers, depending on how the system develops.
Congress leaders have also connected the policy to wider discussions involving the United States and digital payment companies. The party has described the decision as an attempt to accommodate US interests. These statements represent the political opposition's interpretation of the policy, and there is no established evidence in the available reports that the UPI charge was introduced specifically because of US pressure. Recent reporting instead describes the measure as a change intended to create a revenue mechanism within the digital payment ecosystem.
The government has maintained that the new arrangement will not impose transaction charges on ordinary consumers. It has also emphasised that the continued availability of free person-to-person UPI payments is being preserved.
UPI has become one of India's most widely used digital payment systems. The platform processed around 24 billion transactions worth approximately 311 billion US dollars in August 2026, according to Reuters. The scale of the system means that even a limited change in the fee structure can have significant implications for banks, payment service providers and merchants.
The introduction of the MDR framework is therefore being closely watched by businesses and the digital payments industry. Larger merchants may need to account for the new payment-related cost, while eligible small merchants are expected to receive exemptions under the framework.
For consumers, the immediate distinction is that the new MDR is not intended to become a direct payment charge when they use UPI. The government has stated that consumers will continue to make UPI payments without transaction charges, while person-to-person transfers will remain free.
The political debate, however, is likely to continue, with Congress questioning the government's decision and its wider implications, while the government and payment authorities have highlighted the protections for consumers and small merchants.
The new rules are scheduled to take effect on October 15, 2026. Their longer-term impact will depend on how merchants, banks and payment platforms implement the framework and whether the new structure affects the cost and availability of digital payment services.