BY SANJEEB KUMAR SAHOO
Love me or hate me—it doesn’t matter to me. I have to speak the truth, and the truth is that the place for leaders and members of every political party to raise their voices on behalf of needy people is on the streets, not in the studios of big corporate media houses and news channels. That is where political leadership truly matters.
I am saying this because people have started believing in the leadership of Rahul Gandhi, India’s Leader of the Opposition, because he always speaks from his heart rather than making statements that would simply benefit his political career.
I have always noticed that he speaks for needy and ordinary people without worrying about whether doing so will benefit his political career. However, today, it seems that the Congress party and Rahul Gandhi are not speaking strongly enough for ordinary people on the proposed new UPI transaction fees. Instead, it appears that they are siding with the government and the banking industry.
Today, neither the party nor Rahul Gandhi has held a protest or press conference or organised a public demonstration against the proposed new UPI transaction fees. Rahul Gandhi and a few Congress leaders have tweeted about the issue, but I would like to point out that I, along with many journalists and ordinary citizens, have also tweeted about it and written articles about the issue.
Now, coming to the point: under the proposed new UPI transaction fee structure, if 1 crore people each make a Rs 10,000 P2M transaction every day, and a nominal MDR of 0.4% applies to P2M transactions above Rs 2,000, the MDR collected would be Rs 400 crore per day.
That means the amount could reach approximately Rs 12,000 crore per month and Rs 1,46,000 crore annually, assuming the same transaction volume continues every day and the entire amount is subject to the 0.4% MDR.
So, to be clear, my calculation is based on transactions made by 1 crore UPI users, not all UPI users, over a period of one month and one year.
India has approximately 55.49 crore users onboarded on the Unified Payments Interface (UPI) platform as of June 2026.
This raises an important question: could such revenue eventually be used to finance freebie schemes aimed at remaining in power indefinitely, while providing benefits primarily to a selected group of top businesses with strong financial and creative capabilities?
I would like to say that I am not very good at mathematics, so my calculations may be wrong. However, my perception of and concerns about the government’s policies are genuine and, in my view, correct.
In my view, the government has not done enough creatively over the last 12 years to address the country’s economic challenges. Instead, people are often asked to pay enormous amounts of money to the government through various taxes, charges and fees.
Therefore, I believe the government may be considering such measures partly because it needs additional revenue to continue funding its welfare and freebie schemes. If that is the case, then some questions also need to be asked about the role and performance of the economists and members of the government’s economic team.
And I must admit that a few months ago, I criticised Ashneer Grover, co-founder of BharatPe. However, I saw him today speaking on behalf of needy people in India, using genuine and logical arguments about the government’s new UPI transaction fee, which will take effect from October 15, 2026.
As a judge would always say, “Convince me and get relief for your client.” His arguments convinced me and gave me some relief.
I would like to make a request to lawmakers who use Indian taxpayers’ money while spending holidays abroad, including 10-day trips each year as part of Indian parliamentary delegations to New York, while also enjoying free luxury accommodation in Lutyens’ Delhi, where the monthly rent of some bungalows is reportedly around Rs 50 lakh, along with other facilities.
Kindly vacate these seats and make way for those who will genuinely speak for and fight for the needy people of India.
What did the Government of India say in its press release at 6:45 p.m. on September 15
The Ministry of Finance, in its press release, said that the newly introduced Unified Payments Interface (UPI) framework has no impact on any person-to-person transactions. UPI will continue to remain completely free for all person-to-person transactions, irrespective of the amount transferred.
Payments to merchants up to ₹2,000, along with transactions covered under the zero-MDR framework for small merchants, will also remain free. Consequently, approximately 96% of all P2M transactions will remain unaffected. MDR will apply only to specified merchant transactions above ₹2,000.
It is clarified that MDR is neither a tax nor a charge collected by the Government or NPCI. It is distributed among payment ecosystem participants, including banks and payment application providers, to support the operation and continued expansion of the UPI ecosystem.
Introduced under the Payment and Settlement Systems Act, 2007, following detailed deliberations by the UPI Steering Committee, the framework seeks to ensure the long-term sustainability of UPI while protecting individuals and small merchants from additional charges.
What Will Remain Free
All Person-to-Person Transactions: All person-to-person (P2P) UPI transactions will remain completely free, irrespective of the amount transferred. No transaction fee, platform fee or other charge may be imposed on individuals for sending or receiving money through UPI. Therefore, UPI transactions accounting for 70% of the total transaction value will remain completely outside the MDR framework.
Merchant Payments Up to ₹2,000: All person-to-merchant (P2M) transactions up to ₹2,000 will remain free of MDR. Customers will not be required to pay any charge when making such payments through UPI.
Payments Received by Small Merchants: Small merchants including street vendors receiving up to ₹1 lakh per month through UPI QR codes under the Person-to-Person-Merchant (P2PM) category will continue to enjoy zero MDR on all transactions. This provision will protect street vendors, neighbourhood shops and other small businesses from additional payment costs.
What Will Attract MDR
Merchant Transactions Above ₹2,000: A nominal MDR of 0.4% will apply only to P2M transactions above ₹2,000. The MDR will be shared among payment ecosystem participants, including banks, payment service providers and UPI application providers. For transactions of ₹75,000 and above, the MDR will be capped at ₹300 per transaction.
Transactions in Essential Sectors: Transactions above ₹2,000 in essential and thin-margin sectors, including railways, telecommunications, insurance, fuel and agricultural inputs, will attract a flat MDR of ₹5 per transaction. The flat charge will provide cost certainty for critical public services and businesses operating on narrow margins.
Capital Market Transactions: Payments relating to mutual funds, securities, stockbrokers and dealers will attract an MDR of 0.02%, capped at ₹300 per transaction. The lower rate is intended to support continued retail participation in formal financial markets.
Customers Will Not Pay MDR
MDR is a charge within the merchant payment ecosystem. It is not a charge on customers making UPI payments.
Banks have been advised to ensure that merchants do not pass MDR charges on to customers. UPI application providers are expressly prohibited from imposing platform fees or hidden charges.
Individuals will continue to have unlimited free usage, with no monthly quotas, volume restrictions or tiered caps on free UPI transactions.
Daily transaction limits prescribed by banks and NPCI, generally ranging from ₹1 lakh to ₹5 lakh depending on the transaction category, are security and risk-management safeguards. They are not charging thresholds.
Most Merchant Transactions Will Remain Unaffected
Data analysis indicates that MDR will apply to only about 4% of merchant transactions.
This means that approximately 96% of merchant transactions will remain unaffected, as they are either below the ₹2,000 threshold or covered by the zero-MDR framework for small merchants.
The framework therefore protects individuals, micro-enterprises and small businesses while introducing a limited charge on larger merchant transactions.
Support for Small Merchants
A dedicated fund will be established to promote UPI adoption among small merchants. An amount equivalent to 5% of total MDR collections will be contributed to this fund.
The fund will support wider UPI acceptance, sustained usage and the inclusion of small businesses in India’s digital payments ecosystem.
Ensuring the Continued Growth of UPI
The framework has been introduced under the Payment and Settlement Systems Act, 2007, following detailed deliberations by the UPI Steering Committee on the applicable rates, operational arrangements and consumer safeguards.
The framework seeks to strengthen the long-term sustainability of UPI while keeping payments free for individuals and protecting small merchants.
Revenue generated from larger merchant transactions will support banks, payment service providers and UPI application providers in expanding and improving payment infrastructure, including in rural and semi-urban areas.
The framework is also consistent with the recommendation of the Standing Committee on Finance in its 32nd Report, which emphasised the importance of a viable revenue.
