RSS affiliate opposes proposed MDR on UPI transactions above ₹2,000

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Swadeshi Jagran Manch co-convener Ashwani Mahajan said that cybersecurity costs should not be cited as a reason for introducing the charge, adding such expenses were part of banks’ regular operations.

Ashwani Mahajan, co-convener of the Swadeshi Jagran Manch (SJM), the economic wing of the Rashtriya Swayamsevak Sangh (RSS), on Wednesday (September 16, 2026) raised concerns about the government’s proposed Merchant Discount Rate (MDR) on UPI transactions above ₹2,000, calling for the move to be reconsidered. He argued that the fee was not justified by the costs involved.

In a post on X, Mr. Mahajan said there was little reason for banks to seek an MDR on UPI, pointing out that the digital payments system had helped bring down their costs in terms of ATMs and other infrastructure. “UPI transaction fee is most unfortunate. It’s demeaning an achievement of Bharat, which has global appeal. Policymakers have failed to factor in reduced logistics costs due to UPI, making Bharat more competitive,” he said.

He also argued that cybersecurity costs should not be cited as a reason for introducing the charge, saying such expenses were part of banks’ regular operations.

The government has proposed a 0.4% MDR on merchant payments above ₹2,000 through UPI from October 15. Payments between individuals and smaller merchant transactions will not attract the fee.

The Finance Ministry has also made it clear that customers will not be charged for making UPI payments. MDR, it said, is a charge within the merchant payment ecosystem, not a fee imposed on users. UPI users will continue to have unlimited free usage, with no monthly quotas or transaction limits, the Ministry said.

“The question is, why them too?” Mr. Mahajan said, arguing that even bigger merchants shouldn’t be taxed for accepting UPI payments.

Speaking to The Hindu, Mr. Mahajan referred to concerns he had raised in a recent article about the United States Trade Representative and India’s zero-MDR system. The SJM co-convener said the government should not change its policy because of such pressure. He said the growth of UPI had reduced the business of international card networks such as Visa and Mastercard and helped India save on foreign exchange outgo. “The government should look at the broader savings generated by UPI before going ahead with the proposed fee,” he added.

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