Congress questions UPI notification, warns it could pave way for transaction fees

The Congress on Tuesday questioned the government’s decision to expressly protect only Unified Payments Interface transactions of up to Rs 2,000 from charges, alleging that the move could eventually pave the way for fees on higher-value payments.

Congress general secretary in-charge of communications Jairam Ramesh also asked whether the policy change was intended to open India’s digital-payments sector to American companies to “appease” US President Donald Trump.

The criticism followed a government notification directing banks and payment-system providers not to levy any direct or indirect charge on people making or receiving UPI payments of up to Rs 2,000 or payments through RuPay debit cards.

The notification does not specify the charging framework for UPI transactions exceeding Rs 2,000. UPI payments have so far operated under a zero-charge regime irrespective of their value.

Ramesh said the notification had been issued under the amended Payment and Settlement Systems Act, 2007, which removed the earlier blanket statutory protection against charges.

“Just as we warned on 6th August 2026 to which the Hon’ble FM herself had deemed it fit to respond, the Modi Government is now using new laws bulldozed through Parliament to start the process of charging for UPI,” he said in a post on X.

Ramesh argued that although the notification prohibited charges on transactions of up to Rs 2,000, it provided no explicit protection for payments above that limit.

“The stage is clearly being set for all of us to pay a fee for UPI transactions,” he claimed.

The Congress leader also expressed concern that the government could revise the threshold through another notification and said there was no longer a statutory guarantee protecting all UPI payments from charges.

“For all we know, the government can introduce a charge for daily person-to-person transactions as well,” he said.

Ramesh accused the Centre of failing to be transparent about the future of UPI charges and breaching the trust of users.

“Is all of this being done to open digital payments for American companies to appease President Trump?” he asked.

The 14th September gazette notification followed an amendment to Section 10A of the Payment and Settlement Systems Act, 2007. The change provides an enabling framework for the introduction of a Merchant Discount Rate on UPI and other notified electronic payment modes.

The amendment was passed by Parliament during the Monsoon Session, which concluded on 13 August. Following its passage, the government said the UPI and Services Steering Committee, headed by the National Payments Corporation of India, would determine the MDR structure.

The government has argued that UPI’s rapid growth requires continuous investment in infrastructure, cybersecurity and fraud prevention. It said a sustainable revenue model was needed to encourage competition, support market expansion and allow more companies to participate in the digital-payments ecosystem.

According to the Centre, relying exclusively on government subsidies would not be viable for UPI’s next phase of growth. It has called for a balanced framework to ensure that the payment system remains robust, inclusive and equipped for future expansion.

The NPCI, an initiative of the Reserve Bank of India and the Indian Banks’ Association, operates the UPI network.

The Congress had raised similar concerns in August when the Taxation and Other Laws (Amendment) Bill was introduced in Parliament. Ramesh then alleged that the legislation removed the statutory guarantee keeping UPI transactions free and could allow MDR charges to be extended to a wider range of payments.

He had also claimed that merchants could pass the processing cost on to customers, leaving ordinary users to bear the eventual burden.

Finance Minister Nirmala Sitharaman rejected that argument at the time, saying MDR was a charge imposed on merchants and not on customers.

Responding to Ramesh, she said the revenue would help banks and financial technology companies invest in infrastructure, innovation and security, ultimately benefiting UPI users.

“Before spreading a canard, @Jairam_Ramesh ji, please consider this: Merchant Discount Rate (MDR) applies only on the merchants and not on the end users/customers,” Sitharaman had said.

She had also pointed out that the NPCI-led steering committee was yet to determine the MDR and that no rate or final charging structure had been decided.

With PTI inputs