Spasht.
UPI merchant fee row

Opposition calls UPI fee a 'tax' under US pressure; finance ministry says the claim is false

16 Sept 2026 · 5 outlets · 1 min read

AI illustration
In 30 seconds
  1. Rahul Gandhi: 'Modi ji, roll back the UPI tax. Now.'
  2. The finance ministry says MDR is not a tax and that UPI stays free for customers.
  3. A US trade report has criticised India's payment rules, but it does not call for this fee.

Opposition leaders demanded on 16 September 2026 that the new UPI fee be withdrawn. Rahul Gandhi, Leader of the Opposition in the Lok Sabha, called it a 'UPI tax' and alleged the government acted under US pressure. Leaders of the SP, AAP, RJD and CPI also criticised the fee. The finance ministry said claims of foreign influence were 'false' and that UPI decisions are made independently. The Retailers Association of India warned the fee could push shops toward cash during the festive season.

What it means for India

If shops start refusing UPI for bigger bills, customers could be pushed back toward cash, the retailers' association warned.

Checked

Claim by claim

?Unverified

The UPI fee was imposed under US pressure.

Said by Rahul Gandhi, Congress

NewsDrum found the USTR's 2026 trade report raised concerns about UPI and RuPay favouring domestic firms, but no public document links those concerns to this decision. The government denies any foreign influence.

NewsDrum · Swarajya
!Misleading

The government 'has put a tax on every single Indian person by taxing UPI'.

Said by Rahul Gandhi, Congress

The fee is not a tax and does not go to the government; it is paid by merchants on about 4% of merchant payments. Critics such as CPI's D. Raja argue merchants may pass costs on, which the rules forbid.

The Indian Express · PIB
In their own words

What each side says

Opposition parties

Rahul Gandhi said Modi had 'decided to lie down straight and prostrate himself in front of Donald Trump'. Mallikarjun Kharge called the decision 'another stark example' of the government's 'meekness'. SP chief Akhilesh Yadav called the BJP a 'toll collector', and CPI's D. Raja called it an 'anti-people decision'.

The Indian Express
Government and BJP

The finance ministry said, 'India's UPI policy decisions are made independently', and that the fee is borne by merchants, not customers. Defence Minister Rajnath Singh praised UPI's growth, citing about 23.66 billion transactions in August.

The Indian Express · Swarajya
Retailers

Retailers Association of India CEO Kumar Rajagopalan said the fee could 'undo years of progress in digital payment adoption among India's smallest retailers'.

BBC News
Honest gaps

Not yet known

  • ?Whether US officials raised the zero-fee rule in the ongoing trade talks.
Who reported this

Sources

Left-leaning · 1Centre · 1Right-leaning · 1Official record · 1International · 1

5 outlets across the spectrum. Leanings are a rough guide to who reported it, not a verdict on accuracy.

  1. The Indian ExpressUPI fee hike: Opposition alleges US pressure; false, says government
  2. SwarajyaGovernment Rejects Foreign 'Pressure' Claims Over New UPI Merchant Fee Framework, Says Decisions Made Independently
  3. PIBUPI Continues to Remain Free for Peer to Peer Transactions and 96% of Merchant Transactions
  4. NewsDrumRahul Gandhi alleges US pressure behind UPI MDR; here's what the record shows
  5. BBC NewsThe small fee raising big questions for India's payments revolution

Spasht writes original summaries. Follow the links to read each outlet's own report. Revision 1.