'PM Modi surrendering to US pressure': Congress attacks Centre over UPI move

The Congress on Tuesday accused the Prime Minister Narendra Modi- led government of quietly opening the door to charges on UPI transactions above Rs 2,000, with Rahul Gandhi alleging that the policy shift would eventually make consumers pay more and questioning whether New Delhi was yielding to pressure from American payment companies.

Congress president Mallikarjun Kharge and general secretary Jairam Ramesh joined Gandhi in targeting the Centre, arguing that the latest notification provides explicit protection from charges only for transactions below Rs 2,000, leaving larger payments without a similar guarantee.

“Modi government has quietly opened the way for imposing a fee on UPI,” Rahul Gandhi alleged.

He claimed transactions above Rs 2,000 account for only around 5 per cent of merchant UPI payments by volume but constitute nearly 65 per cent of their total value, making any possible Merchant Discount Rate (MDR) on this segment significant.

Gandhi questioned the government's argument that consumers would not be charged directly. Any fee imposed on merchants, he said, would ultimately find its way into prices and be recovered from customers.

He also sought to give the issue a US trade angle, claiming American payment companies had long opposed India's zero-MDR regime.

Drawing a parallel with his criticism of the government's handling of trade negotiations with Washington, Gandhi accused PM Modi of “surrendering” before American pressure.

Kharge called the possible levy a “Digital Payments Tax” and accused the government of going back on its push for a cashless economy.

He recalled that digital payments were projected as one of the benefits of demonetisation and pointed to Finance Minister Nirmala Sitharaman's earlier assurance in Parliament that UPI would not attract taxes or charges.

Kharge cited reports suggesting a possible charge of Rs 25 on a Rs 5,000 transaction and Rs 50 on a Rs 10,000 payment, and asked the government to clarify whether these figures were correct.

The Congress president argued that even if MDR were formally charged to merchants, the cost would ultimately be passed on to consumers already battling high prices.

Ramesh, meanwhile, said the Congress had warned about such a possibility on August 6 and accused the government of using amendments to the Payment and Settlement Systems Act, 2007, to begin changing the zero-charge framework.

“A notification has just been issued... that prohibits banks and providers from charging only for UPI transactions under Rs 2,000. But there is NO explicit protection for any transaction above this cap,” Ramesh said.

He warned that the threshold could subsequently be changed through another notification and questioned whether even person-to-person UPI payments could eventually be brought within a charging framework.

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

The Congress also sought a clear answer on the motive behind the change, with Ramesh asking whether the digital payments market was being opened further to American companies to “appease President Trump”.