India Notifies UPI Fee Framework, Sparking Political Clash

The Indian government has notified a framework allowing a Merchant Discount Rate (MDR) on UPI transactions above Rs 2,000, ending the long-standing zero-MDR policy for digital payments. The move, announced on September 15, 2026, has sparked a political controversy, with the opposition Congress party alleging it will raise consumer costs and is a result of US pressure. Under the new rules, a 0.4% charge will apply to UPI payments above Rs 2,000 made to merchants, capped at Rs 300 for transactions of Rs 75,000 and above. Essential sectors like railways, telecom, and fuel will have a flat Rs 5 fee per transaction, while capital markets will see a 0.02% rate. The government has stated that the MDR applies only to merchants, not end-user customers, and is necessary to fund cybersecurity, fraud prevention, and digital infrastructure. Congress leader Rahul Gandhi, the Leader of the Opposition, accused the Modi government of "quietly opened the door to imposing fees on UPI" and "surrendering to American pressure." He argued that while transactions above Rs 2,000 account for only 5% of UPI volume, they represent nearly 65% of its total transaction value.