No US pressure behind UPI MDR levy, says FinMin

New Delhi: The Finance Ministry on Thursday dismissed allegations that US pressure influenced the decision to levy a 0.4 per cent Merchant Discount Rate (MDR) on select UPI transactions, saying the latest NPCI guidelines do not give international credit cards any advantage over RuPay, and asserted that it does not expect the levy to trigger a shift towards cash transactions.

The Department of Financial Services (DFS) issued the clarification in response to observations in the US Trade Representative's (USTR) 2026 report on the inability of US electronic payment service providers to participate in the UPI ecosystem, including credit transactions on UPI, on a level playing field with RuPay.

"The NPCI circular of September 15, 2026, does not allow credit transactions on UPI by any other credit card other than the RuPay credit card. There is a clear policy of only allowing RuPay credit card on UPI to enable RuPay credit card to become the preferred choice of credit card amongst users in India," the DFS said in a post on X.

"The allegation that MDR has been introduced under any external influence is patently false and misleading," it added. The rejection comes amid allegations by some Opposition parties, including the Congress, that the government had succumbed to US pressure in deciding to impose a 0.4 per cent MDR on UPI transactions above Rs 2,000.

From October 15, a 0.4 per cent MDR will apply to person-to-merchant UPI payments above Rs 2,000. The charge will be paid by merchants, not consumers, and will be capped at Rs 300 for transactions of Rs 75,000 or more. Payments between individuals, as well as the vast majority of everyday merchant payments, will remain free.

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