Finance Minister Nirmala Sitharaman on Thursday dismissed Congress leader Jairam Ramesh’s assertion that ordinary consumers could eventually be made to pay more for UPI transactions, clarifying that any Merchant Discount Rate (MDR), if introduced in the future, would be applicable only to merchants and not to customers.
The clarification comes amid political debate over proposed legislative changes that could give the Centre the authority to modify the existing zero-MDR framework for UPI and RuPay transactions. Sitharaman also stressed that no decision has yet been taken on introducing an MDR.
Responding to Jairam Ramesh’s criticism through a post on X, the finance minister said there was no basis for claims that consumers would bear the cost of any future MDR.
She explained that the Merchant Discount Rate is designed to support the digital payments ecosystem by enabling banks and fintech companies to strengthen infrastructure, enhance security and invest in innovation.
“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 posted.
The remarks came after Jairam Ramesh argued that the burden of the Merchant Discount Rate would ultimately fall on the common man. He also maintained that the government’s suggestion that such a charge may be necessary to make UPI financially sustainable was “entirely wrong”.
Rejecting the allegation, Sitharaman reiterated that end users would not be required to pay merchant fees.
Before spreading a canard, @Jairam_Ramesh ji, please consider this:1. 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… https://t.co/sleUX4ztWe
— Nirmala Sitharaman (@nsitharaman) August 6, 2026
Decision On MDR Yet To Be Taken
The finance minister clarified that there is currently no proposal to levy an MDR on UPI transactions.
She said the issue would only be examined by the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), after Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026.
Under the proposed legislation, the central government would gain the authority to notify specific electronic payment modes that will continue to remain exempt from charges.
Sitharaman added that the committee would deliberate on the Merchant Discount Rate only after the Bill is approved by Parliament.
FM Criticises Opposition Over Parliament Disruptions
The finance minister also targeted the opposition over repeated disruptions during the ongoing Monsoon Session, saying these interruptions prevented meaningful discussions on the proposed legislation.
Referring to the functioning of both Houses of Parliament since the session began on July 20, she said, “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)”.
The Taxation and Other Laws (Amendment) Bill, 2026 proposes changes to Section 10(A) of the Payment and Settlement Systems Act, 2007. The amendment would empower the central government to modify the existing zero-MDR regime governing UPI and RuPay transactions.
However, the Bill itself does not mandate the introduction of an MDR or specify any charges. Instead, it creates the legal framework that would allow the government to revise the current zero-MDR policy in the future, should it choose to do so.
PCI On UPI
The Payments Council of India (PCI) also issued a clarification on the ongoing discussion around UPI and merchant charges, outlining what the debate means for consumers, merchants and the country’s digital payments ecosystem. The council said UPI has remained free for consumers since its launch in 2016, and users can continue making instant digital payments without incurring transaction charges.
There has been considerable discussion around UPI and merchant charges. Here are the facts behind the conversation what it means for consumers, merchants, and India’s digital payment ecosystem.
1. Will I have to pay to use UPI?No. UPI has always been free for consumers since…
— PCI – Payments Council of India (@PCIUpdates) August 7, 2026
PCI clarified that small businesses, including kirana stores, are not required to pay Merchant Discount Rate (MDR) for accepting UPI payments. It said the platform was designed to make digital payments accessible even for the smallest merchants, and protecting them remains a key priority.
