Congress accused the government of 'giving into' U.S. demands by introducing a 0.4% merchant discount rate (MDR) on UPI transactions above Rs 2,000, calling the move 'Narendra's Ongoing Trump Appeasement.' Senior Congress leader Jairam Ramesh made the remarks on social media, linking the decision to U.S. pressure and the potential impact on Indian IT professionals. The MDR framework, introduced by the National Payments Corporation of India, will take effect from October 15, 2026, and apply to select merchant transactions, while leaving personal UPI transactions free of charge.

The Congress leader claimed that the estimated annual cost of running the UPI ecosystem is around Rs 20,000 crore, which he said is less than 10% of the Reserve Bank of India's transfers to the Union government in recent years. He questioned whether the move would make UPI 'sustainable' as the government claims, suggesting it was done to enable U.S. card companies to compete with UPI. Ramesh also referenced the U.S. Trade Representative's criticism of UPI for being free and driving out Visa and Mastercard, and asked if the 0.4% MDR was chosen because debit card MDR is also 0.4%.

The government has stated that MDR is a charge within the merchant payment ecosystem and not on customers using UPI. The finance ministry emphasized that individuals will continue to have 'unlimited free usage' of UPI, with no monthly quotas or volume restrictions. The move has been criticized by opposition parties, with Congress terming it 'Modi tax' and alleging that the government is 'compromised' and 'surrendering' to American pressure. The BJP has accused Congress of spreading 'fake news,' stating the government made it clear that MDR charges would not be levied on consumers.

Ramesh also linked the UPI MDR change to broader U.S. policies, including the proposed 100% tariffs on Indian goods and increased H-1B visa costs, which he said could lead to the deportation of IT professionals. However, no official response from the government or U.S. authorities has been provided to confirm these claims. The U.S. Senate has already approved the tariff bill, but the House is yet to vote on it. The connection between the MDR change and U.S. policies remains unverified, with no direct evidence linking the two.

The introduction of the MDR marks a significant shift in the UPI ecosystem, which has been a cornerstone of India's digital payments strategy. While the government aims to ensure the platform's long-term viability, critics argue that the move could deter users and undermine the system's growth. The lack of a clear rationale for the 0.4% rate and the absence of a formal response from the government or U.S. entities leave key questions unanswered. The impact on UPI's user base and the broader digital economy remains uncertain, with further developments yet to unfold.