Finance Ministry debunks external pressure claims, says decisions for UPI made independently

The Ministry firmly denied allegations that foreign actors shaped the recent policy decisions regarding merchant charges on high-value digital transactions.

Debunking the External Pressure Myth: Some claims suggest the change is due to foreign influence. This is false. Indias UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem, the Ministry of Finance stated on X.

The government underscored that the digital payment system continues to be free for everyday consumers across India. Sending money to friends, settling bills at local shops, and scanning quick response codes incur no customer fees. Under the updated framework, person-to-person transfers carry zero charges, irrespective of the amount transferred.

The Ministry explained that normal day-to-day commercial transactions remain outside the purview of the new fee structure. Vendors receiving up to Rs 1 lakh per month through QR codes operate under a zero-merchant discount rate protection net. Furthermore, the Ministry noted that over 95 per cent of merchant payments stand below the Rs 2,000 threshold, leaving the overwhelming majority of retail volume unaffected.

Only larger commercial transactions above Rs 2,000 attract a nominal 0.4 per cent charge, an expense borne strictly by merchants rather than retail buyers. To protect the public, commercial banks received explicit instructions preventing merchants from passing MDR costs onto consumers. UPI applications cannot levy separate platform charges.

Essential retail services also operate under tightly controlled limits. Payments for railway bookings, fuel stations, telecommunications, utility bills, and insurance services above Rs 2,000 face a capped flat rate of Rs 5 per transaction. Investments in mutual funds and securities transactions attract a 0.02 per cent rate, subject to an upper cap of Rs 300.

Highlighting the scale and necessity of modernising backend systems, the Ministry cited the platform's exponential domestic expansion since 2016, noting that the network processed 24.5 billion transactions in August 2026 alone.

To keep this system self-sustainable, secure and innovative, a small fee on high-value merchant transactions helps fund: better infrastructure and cybersecurity, support for small merchants in Tier IIIVI towns and rural areas, and awareness and incentives to expand UPI adoption, the Ministry added.

The government maintained that the revenue collection structure balances platform upkeep with grassroots economic support.

The new framework ensures resources from higher-value merchant transactions are reinvested to support small businesses and strengthen digital payments across the country, the Ministry of Finance said. (ANI)