Business
oh-PTI
The Congress on Tuesday criticized the Modi government for its notification of UPI transactions with Rahul Gandhi, alleging that it had quietly paved the way for imposing fees on such transactions and that a “compromised” Prime Minister Narendra Modi had “once again capitulated” to American pressure.
The Opposition party has raised questions over the government’s notification of UPI transactions, saying it is clearly setting the stage for people to pay fees on such transactions.
The Congress criticized the government’s September 14 notification prohibiting charging fees for UPI transactions up to Rs 2,000, arguing that it indirectly allows merchants to pass on the cost to consumers, potentially violating safeguards against future fees.
Congress president Mallikarjun Kharge said the Modi government’s “booty” has now reached UPI.
“No UPI fees” has been changed to “No fees for UPI transactions up to Rs 2,000.” Sky-high inflation has already emptied the pockets of the common man. Wholesale inflation is around 10% and the BJP government is planning to impose a ‘digital payments tax’ on the people in a bid to wipe out the few savings they have left,” Kharge said in a Hindi message on X.
“Look at the biggest failure of the Modi government – ten years ago, demonetization was a shock to the country’s economy. When questions were raised about the disastrous impact of demonetisation, the government said it was introduced to promote digital payments and a cashless economy,” he said.
The Finance Minister recently said in Parliament that no taxes or fees will be levied on UPI, but according to some reports, the potential fee could be Rs 25 per Rs 5,000 transaction and up to Rs 50 per Rs 10,000 transaction, Kharge said and asked if this is true.
Speaking of MDR, doesn’t the government know that this additional burden on traders will eventually be recovered from the pocket of the common consumer through higher prices, Kharge asked.
“Instead of providing relief to the inflation-weary population, the Modi government is looking for a new way to pick their pockets every day!!” said the Congress leader.
Congress Claims Hidden Blame on UPI
In a post in Hindi on X, Gandhi said the Modi government has quietly paved the way for imposing duties on UPI.
“MDR can now be levied on UPI trade transactions exceeding Rs 2,000. Even if these transactions constitute only 5% of the volume, they account for almost 65% of the total value of UPI transactions,” Gandhi said.
“The government says buyers will not be charged. But where will the fees collected from shopkeepers ultimately come from? These will be added to the prices, straight from the buyer’s pocket,” the Leader of the Opposition said in the Lok Sabha.
According to Gandhi, US payment companies have long opposed India’s zero MDR policy. Now the Modi government has opened the way for policy changes in this direction, Gandhi said.
“Like the US trade deal, a compromised PM Modi is once again bowing to American pressure,” the former Congress chief said.
The Congress said the government has once again demonstrated complete dishonesty and transparency and has undermined the trust of users.
Government notice stirs controversy
The opposition party’s attack came after the government directed banks and payment system providers not to charge fees on Unified Payments Interface (UPI) transactions up to Rs 2,000 or on payments made through RuPay debit cards.
However, the government has not clarified whether there will be a charge on transactions worth more than Rs 2,000 payable by traders. Till now, no fee has been levied on UPI transactions, irrespective of the amount.
Reacting to this, Congress General Secretary in charge of Communications Jairam Ramesh said, “As we warned on August 6, 2026, to which the Hon’ble External Affairs Minister herself saw fit to respond, the Modi government is now using the new laws passing through Parliament to begin the process of charging for UPI.”
“A notification has just been issued under the amended Payment and Settlement Systems Act, 2007, which prohibits banks and vendors from charging fees only for UPI transactions of less than Rs 2,000. But there is NO explicit protection for any transaction exceeding this limit,” Ramesh said on X.
According to him, it is clear that we are all willing to pay fees for UPI transactions.
“Tomorrow the limit itself could be changed with another such notice – there is no longer a guarantee in the law. As far as we know, the government may also introduce charges for daily transactions between people,” Ramesh said.
“The Modi government has once again demonstrated a complete lack of honesty and transparency and has undermined user trust. Is all this being done to open up digital payments to American companies to appease President Trump?” – said the Congress General Secretary.
Legal framework and past debates
According to a gazette notification dated September 14, no bank or system provider will charge, directly or indirectly, any fee from a person making or receiving payment through RuPay debit card or UPI transaction up to an amount of up to Rs 2,000.
The notification follows an amendment to Section 10 A of the Payment and Settlement Systems Act, 2007, which provides a favorable framework for the introduction of Merchant Discount Rate (MDR) for payments through UPI and other notified electronic payment modes.
Last month, Congress criticized the government over the Taxation and Other Laws (Amendment) Bill even before its passage, questioning whether Prime Minister Narendra Modi was seeking to dilute UPI and open up the digital payments sector to American businesses “under pressure” from his “good friend Donald Trump”.
Ramesh said the Modi government’s latest bill removes the statutory guarantee that keeps UPI transactions free. According to Ramesh, this opens up the possibility of charging merchant discount rate (MDR) fees, which could easily be extended to all payments in the future.
Replying to Ramesh, Sitharaman said, “Before spreading rumors @Jairam_Ramesh ji please consider the following: Merchant Discount Rate (MDR) is applicable only to merchants and not to end users/customers. This will help banks and fintechs invest more in infrastructure, innovation and security. All UPI users will reap the benefits of this investment.”
