Will ordinary Indian users have to pay for UPI? Nirmala Sitharaman breaks silence on Congress' MDR fee claim

Finance Minister Nirmala Sitharaman on Thursday (Aug 6) dismissed Congress leader Jairam Ramesh's claim that ordinary users could end up paying for UPI transactions. In a post on X, the Congress leader had claimed that with the Modi government's Taxation and Other Laws (Amendment) Bill, 2026, "eliminates the statutory guarantee that had so far kept UPI transactions fee-free". He alleged that "The burden of this will ultimately fall on ordinary people, who may now have to pay even for using UPI".

Replying to Ramesh's X post, Indian FM Sitharaman clarified that any Merchant Discount Rate (MDR), if introduced in the future, would be charged only to merchants and not to customers.

The exchange comes amid a political debate over the Taxation and Other Laws (Amendment) Bill, 2026, which seeks to give the Centre the legal authority to modify the existing zero-MDR framework for UPI and RuPay transactions.

Sitharaman: MDR is for merchants, not customers

Responding to Jairam Ramesh on X, Sitharaman said his claim was misleading and urged him not to spread misinformation. "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. It will support the Banks & Fintech to invest more on infrastructure, innovation & security. All users of UPI will reap the benefits of this investment," she wrote.

The finance minister said the objective of MDR is to strengthen India's digital payments ecosystem by enabling banks and fintech companies to invest more in infrastructure, innovation and cybersecurity.

No decision yet on imposing MDR

Sitharaman also clarified that the government has not taken any decision to introduce an MDR on UPI transactions.

She said the issue would be examined by the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), only after Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026.

The proposed legislation authorises the Centre to specify which electronic payment modes or transactions will remain free of charge. According to the finance minister, any discussion on merchant fees will take place only after the Bill becomes law.

What did Jairam Ramesh say?

Earlier, Congress leader Jairam Ramesh argued that even if the Merchant Discount Rate is levied on merchants, the cost would ultimately be passed on to consumers.

He also rejected the government's position that introducing MDR is necessary to make the UPI ecosystem financially sustainable, describing the argument as "entirely wrong."

Sitharaman, however, maintained that customers would not be required to pay the merchant fee.

FM blames Opposition for delay in debate

The finance minister also criticised the Opposition for repeated disruptions during the ongoing Monsoon Session, saying the proposed legislation could have been debated in Parliament had proceedings not been stalled. "Could have been discussed on the floor of the House if your party @INCIndia engages constructively in Parliament when the Bill was/is tabled. (LS/RS respectively)," she wrote.

The Bill itself does not impose an MDR on UPI or RuPay transactions. Instead, it creates a legal framework that would allow the government to modify the current zero-MDR regime through a notification at a later stage.