Amid opposition targeting the government for introducing a 0.4 per cent fee on UPI transactions above Rs 2,000, a top official said there is no question of rolling back the decision. “When a decision has been taken, the question of its rollback doesn’t arise,” a government official was quoted as saying by news agency PTI. The opposition has alleged that the government has bowed before “American imperialism” by introducing the MDR framework for UPI. The move would push up prices of most commodities, the opposition claimed. The BJP hit back, accusing the Congress of spreading “fake news” and saying that the government had made it absolutely clear that MDR charges would not be levied on consumers.
Congress general secretary in-charge of communications Jairam Ramesh asked whether the Merchant Discount Rate (MDR) was announced to enable US card companies to compete with UPI.
0.4 per cent fee on UPI transfers
The government on Tuesday announced that a 0.4 per cent fee would be levied on UPI transfers worth more than Rs 2,000 made to merchants from October 15 while explicitly ring-fencing everyday person-to-person transactions as well as small payments from any charge.
“Customers will not be required to pay any charge when making such payments through UPI,” the finance ministry said in a statement.
“MDR is a charge within the merchant payment ecosystem. It is not a charge on customers making UPI payments,” it said.
Also, individuals will continue to have “unlimited free usage, with no monthly quotas, volume restrictions or tiered caps on free UPI transactions”, it said.
The carefully calibrated move signalled the end of an era for the world’s largest real-time payments system.
The move has invited sharp criticism from the opposition parties.
Under the new framework, small merchants earning up to Rs 1 lakh a month through UPI QR codes will remain exempt, with the government saying the exemption covers 96 per cent of merchant transactions.
The new MDR cannot be passed on to customers. Person-to-person UPI transfers, which account for 37 per cent of UPI volume and 70 per cent of its value, will remain outside the charge.
Delhi traders plan cash payments push
Meanwhile, New Delhi Traders Association general secretary Amit Gupta told PTI that the additional charge would make UPI payments a costly option for traders who are already operating on tight margins.
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