NEW DELHI, SEPTEMBER 16, 2026 ; Congress leader Rahul Gandhi on Wednesday criticised the newly introduced Merchant Discount Rate (MDR) on certain UPI merchant transactions, accusing Prime Minister Narendra Modi of yielding to pressure from US President Donald Trump.
In a video posted on X, Gandhi urged the Prime Minister to “have a spine, stand up” and withdraw what he described as a “UPI tax”.
Gandhi compared Prime Minister Modi’s approach with former Prime Minister Indira Gandhi’s reported remark that she did not lean either left or right but “stood straight”. He used the comparison to criticise what he described as the government’s approach towards the United States.
“Modi ji has a completely different concept,” Gandhi said, alleging that the Prime Minister had decided to “prostrate himself” before US President Donald Trump.
He further alleged that the government had imposed a burden on Indians through the new UPI framework and demanded an immediate rollback.
What Has Changed Under the New UPI Framework?
The new framework, effective October 15, 2026, introduces an MDR of 0.4 per cent on specified person-to-merchant UPI transactions above ₹2,000, subject to applicable exemptions and caps.
Importantly, the Union Finance Ministry has clarified that the new MDR is not a tax and is not collected by the government or NPCI. The fee is distributed among participants in the payments ecosystem.
The government has also clarified that:
- Person-to-person (P2P) UPI transactions will remain completely free, regardless of the amount transferred.
- UPI payments to merchants of up to ₹2,000 will remain free.
- Transactions covered under the zero-MDR framework for small merchants will continue to remain free.
- Approximately 96 per cent of P2M transactions are expected to remain unaffected.
- MDR will apply only to specified merchant transactions above ₹2,000.
Congress Alleges US Pressure
The Congress has alleged that the new fee structure reflects US pressure on India to move away from its long-standing zero-MDR model for UPI.
Gandhi has previously accused the Modi government of being under American pressure. The Congress has also used the phrase “Narendra’s Ongoing Trump Appeasement” in its criticism of the government.
These are political allegations by the Congress and have been rejected by the BJP.
BJP Rejects Congress Allegations
The BJP has accused the Congress of spreading misinformation over the new UPI framework and has stressed that consumers will not be directly charged MDR under the announced system.
The Finance Ministry has similarly stated that MDR is not a government tax and that the framework is intended to support the long-term sustainability and expansion of the UPI ecosystem.
UPI Remains Free for Person-to-Person Transfers
The clarification is particularly relevant for ordinary person-to-person payments. A person transferring money to another individual through UPI will continue to be able to do so without an MDR charge, irrespective of the amount.
The new fee structure instead concerns specified merchant transactions exceeding ₹2,000, with exemptions designed to protect small merchants and certain sectors. Reuters reported that the revised framework is intended to create a transaction-linked revenue model while retaining zero MDR for small merchants and P2P transfers.
The political dispute is therefore centred on the implications of the new merchant-fee framework, with the Congress opposing the move and the government defending it as a measure aimed at sustaining India’s rapidly expanding digital-payments infrastructure.
