Indian Finance Ministry Dismisses Claims of Foreign Interference in UPI MDR Implementation

New Delhi, September 16 (Daily Kiran) : The Indian Finance Ministry has firmly rejected allegations suggesting that foreign interference influenced the introduction of the Merchant Discount Rate (MDR) in the Unified Payments Interface (UPI). In a statement on social media platform X, the ministry emphasized that India has made decisions regarding its digital payment systems independently since UPI’s launch in 2016.

Since its inception, UPI has evolved into the world’s largest real-time interoperable payment system, developed entirely on India’s own terms. The ministry clarified that decisions related to UPI’s policies are made autonomously, with the aim of creating a self-sufficient, inclusive, and cost-effective digital payment ecosystem.

According to government data, UPI recorded 24.5 billion transactions in August 2026 alone. To maintain the system’s sustainability, security, and innovation, a nominal fee will be charged on higher-value merchant transactions. This fee will fund improved infrastructure and cybersecurity, as well as provide support for small businesses in tier-three and tier-four cities and rural areas. Additionally, it aims to enhance awareness and incentives for increased UPI usage.

The ministry stated, “The new UPI framework ensures that resources generated from higher-value merchant transactions are reinvested to support small businesses and strengthen digital payments across the nation.”

For consumers, using UPI remains free. Sending money to friends, making payments at stores, or scanning QR codes incurs no charges. Only transactions exceeding ₹2,000 will require a small fee of 0.4%, significantly lower than credit card or other network charges.

For transactions over ₹2,000 related to railways, fuel, telecom, bill payments, and insurance, a flat charge of ₹5 applies. In contrast, mutual fund and securities payments incur a charge of only 0.02%, capped at ₹300.

The ministry further clarified that merchants cannot pass the MDR costs onto customers, and UPI apps are prohibited from imposing any platform charges.