Congress flags US link to new UPI charges, says Modi ‘surrendered’ before US

Two days after the Modi government announced new charges on UPI transactions above Rs 2,000, the Congress on Wednesday sought to link the decision to the US, alleging that the government had once again “surrendered” before American interests.

“US payment companies have consistently opposed India's zero-MDR policy, and Narendra Modi has surrendered to them,” Congress social media head Supriya Shrinate said at a press conference in Delhi.

Shrinate referred to the US Trade Representative's 2026 report, which criticised India’s UPI and RuPay for being free and argued that this was causing losses to US companies such as Visa and Mastercard.

“The US said that India should increase MDR — they said it, and Narendra Modi has done just that,” she said.

The government has clarified that the Merchant Discount Rate (MDR) will not apply to person-to-person transactions. It will, however, apply to person-to-merchant (P2M) UPI transactions above Rs 2,000, which were free until now.

MDR is the fee merchants pay to banks and payment providers for processing digital payments.

The Congress also highlighted the presence of US companies in India’s UPI ecosystem. Nearly 86 per cent of the Indian UPI payment market is held by two American companies, it said.

PhonePe's primary parent company is Walmart, which holds a 71.77 per cent stake in the company. Google Pay is owned by Google and its parent company, Alphabet Inc.

The government’s decision has also raised questions over its timing. Various media reports have said the deal has almost been finalised and could be announced at any time.

It is worth mentioning here that the Modi government had passed a Bill removing the legal barrier in the Monsson session of the parliament that prevented banks and payment service providers from charging MDR on UPI and other notified digital payment modes.

While the government had earlier said that no immediate decision had been taken to impose charges, it has now announced the new MDR framework.

The Congress has highlighted the chronology and called the government a “loot ki sarkar”. ‘Extortion man’ Modi's reign of terror continues,” Shrinate said, adding: “

In August, the Modi government introduced the Taxation and Other Laws Amendment Bill to enable MDR on UPI. On 6th of August, Finance Minister Nirmala Sitharaman told Parliament that no decision on MDR had been taken. On 14th September, a notification was issued late at night imposing MDR on commercial UPI transactions above Rs 2,000.”

Lok Sabha Opposition Leader Rahul Gandhi also questioned the move in a post on X.

“Now, MDR can be levied on merchant UPI transactions above Rs 2,000. Even if these transactions account for just 5 per cent of the volume, they make up nearly 65 per cent of UPI’s total transaction value. The government says no fees will be charged to customers. But where will the fees imposed on shopkeepers ultimately come from?” he said.

“Modi government's loot has now reached UPI,” Congress president Mallikarjun Kharge said.

The issue has also acquired significance in the context of the ongoing India-US trade negotiations. The US and India have been negotiating a trade agreement, with the two sides having announced a framework earlier this year.

The issue also has a significant US corporate dimension. PhonePe, India's largest UPI platform by transaction volume, is majority-owned by Walmart, which held a 71.77 per cent stake as of its latest IPO filing.

Google Pay, the second-largest UPI platform, is owned by Google parent Alphabet. Recent data puts the combined transaction-volume share of PhonePe and Google Pay at more than 80 per cent.

The government, meanwhile, has defended the new framework as a measure to make the UPI ecosystem financially sustainable while protecting ordinary users and small merchants. It said around 96 per cent of P2M transactions will remain unaffected and all P2P transactions will continue to be free.

Interestingly, the Swadeshi Jagran Manch, an RSS affiliate, urged the Modi government to reconsider its decision to impose a MDR on UPI transactions exceeding Rs 2,000, citing that the move is unwarranted and could undermine a significant national achievement.