New Delhi, 17 September 2026As soon as the Merchant Discount Rate (MDR) charge was implemented on UPI transactions, there was speculation that India had taken this decision due to economic pressure from America. However, the Financial Services Department of the Central Government has rejected all these claims in strong words. The government has clarified that the decision to impose MDR charge has not been taken under any foreign pressure, but to make the country's digital payment ecosystem stronger and competitive.
Recently, some problems regarding India's UPI system were shown in a US trade report. Complaints were made that American companies were not getting adequate entry into the Indian UPI market and there were obstacles in credit card based UPI payments. Apart from this, questions were also raised on NPCI's rule of 30% market share limit. It was only after this report that the controversy started regarding the introduction of new MDR rule in India.
Citing the NPCI circular dated September 15, 2026, the government said that only Indian 'Rupay Credit Card' has been allowed for credit card linking on UPI. If there was pressure from America, their payment companies would have got equal opportunity in UPI. But in this system only India's own RuPay network has got priority. Additionally, RuPay Debit Card has been made MDR free to increase its usage.
According to the government argument, the use of UPI grew rapidly but there was no solid source of income for small payment companies. As a result, only a few big companies came to dominate the market. By implementing MDR on large merchant transactions, small payment companies will get revenue, so that they will be able to survive in the market and compete with big companies.
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Will general customers have to pay charges on every payment?
According to DFS, there will be no charge for transferring money from one person to another. Approximately 96% of merchant transactions will be completely free. MDR charge will be applicable only on certain and large merchant transactions, which will have to be paid by the merchant and not by the customer. The government has clarified that the deadline of 30% market share rule has been extended till December 2026 and all these decisions have been taken in the interest of the Indian digital payment system.