Stage Being Set for Levying UPI Transaction Fee: Congress Slams Government

Congress Raises Alarm Over UPI Charges

The Congress on Tuesday accused the Narendra Modi government of setting the stage for introducing fees on Unified Payments Interface (UPI) transactions. The criticism followed a government notification stating that banks and payment system providers cannot levy charges on UPI transactions of up to Rs 2,000 or payments made through RuPay debit cards.

The opposition party argued that the notification does not explicitly guarantee that UPI transactions above Rs 2,000 will remain free.

Jairam Ramesh Questions the New Framework

Congress general secretary in charge of communications Jairam Ramesh questioned the government's decision, arguing that the notification creates a pathway for charges to be introduced on higher-value UPI transactions.

Ramesh said the government could potentially change the Rs 2,000 threshold through a future notification. He also questioned whether the move could eventually affect person-to-person UPI transactions.

The Congress has also questioned whether the policy could benefit American digital-payment companies, linking the issue to wider concerns about India's economic and trade policies.

Rahul Gandhi Also Criticises the Government

Leader of Opposition in the Lok Sabha Rahul Gandhi separately alleged that the government's move opens the door to Merchant Discount Rate (MDR) charges on merchant UPI transactions above Rs 2,000.

Gandhi argued that even if customers are not directly charged, merchants could eventually pass additional costs on to consumers through higher prices. He also alleged that the change could have been influenced by pressure from American payment companies.

These are political allegations from Congress and are not established findings.

What the Government Notification Says

According to the September 14 gazette notification, banks and payment system providers cannot impose charges, directly or indirectly, on a person making or receiving a UPI transaction of up to Rs 2,000. The same protection applies to payments made through RuPay debit cards.

The notification follows amendments to the Payment and Settlement Systems Act, 2007, which created an enabling framework for an MDR on UPI and other notified electronic payment methods.

Government Says MDR Would Apply to Merchants

The government has previously clarified that MDR is a charge imposed on merchants and not directly on customers.

Finance Minister Nirmala Sitharaman said MDR would help banks and fintech companies invest in infrastructure, innovation, cybersecurity and payment security. The government has also argued that relying entirely on subsidies may not be sustainable as India's digital-payment ecosystem continues to expand.

UPI Charges Remain a Political Flashpoint

The issue has become a fresh point of confrontation between the BJP-led government and Congress. The opposition has warned that removing a statutory guarantee for zero-MDR transactions could eventually lead to broader charges.

The BJP, however, has accused Congress of spreading "fake news" and pointed out that the government has not introduced a direct fee for consumers making UPI payments.

The government has also clarified that consumers will not automatically have to pay a transaction fee simply because a UPI payment exceeds Rs 2,000. Any future MDR would concern specified merchant transactions, while person-to-person UPI payments are expected to remain free under the current framework.

Why the UPI Fee Debate Matters

UPI has become one of India's most widely used digital-payment systems, supporting millions of transactions across merchants and individuals. Any change to its pricing structure could therefore have implications for consumers, small businesses, banks and fintech companies.

The central issue in the current debate is whether a future MDR would remain limited to merchants or whether businesses could ultimately transfer the additional cost to consumers.

Conclusion

The Congress has strongly criticised the government's latest UPI notification, claiming it could pave the way for transaction charges in the future. The government maintains that customers will not be directly charged and that any MDR framework would support the sustainability and security of India's digital-payment infrastructure.

With both sides taking sharply different positions, the UPI pricing debate is likely to remain a significant issue in India's digital economy and political discourse.