Merchant fee on UPI payments not due to foreign pressure, says fin min
This story was originally published at 15:22 IST on 17 September 2026
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NEW DELHI – The finance ministry Thursday refuted claims of foreign influence behind the introduction of the merchant discount rate, terming the allegations "patently false and misleading." The Department of Financial Services said the fee on Unified Payments Interface was imposed with the intention of supporting domestic companies and safeguarding India's sovereignty in the electronic payments ecosystem.
The department has categorically dismissed two theories referring to the US Trade Representative report of 2026. It rejected the claims that the fee would provide a level-playing field to US electronic payment services suppliers for participating in the UPI ecosystem.
The circular issued by the National Payments Corp. of India only allows RuPay credit card to make credit transactions of UPI, the department said. "There is a clear policy of only allowing RuPay credit card on UPI to enable RuPay credit card to become the preferred choice of credit card amongst users in India."
The department further clarified that the mandated market share limitation of 30% for third-party application providers is yet to be implemented. "...this mandate could not be implemented because companies other than the market leaders could not compete in absence of self-sustaining revenue model," the department said on social media platform X.
Merchant discount rate on select high-value transactions would provide an independent revenue model to smaller companies, enabling them to compete for a higher share in the UPI ecosystem, the department said.
The government on Tuesday announced a merchant discount rate of 0.4% on certain person-to-merchant payments of over INR 2,000 using UPI effective Oct. 15. While person-to-person transactions will remain completely free, the rate will be applied on specified person-to-merchant transactions above INR 2,000. Such transactions will have rate capped at INR 300 for transactions of INR 75,000 and above, according to a government release. End
Reported by Radhika Tiwari
Edited by Avishek Dutta
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