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

Swadeshi Jagran Manch co-convenor Ashwani Mahajan said cyber security costs should not be cited as a reason for levy, adding that such expenses are part of the normal operations of banks.

Ashwani Mahajan, co-convenor of the Swadeshi Jagran Manch (SJM), the economic wing of the Rashtriya Swayamsevak Sangh (RSS), on Wednesday (September 16, 2026) expressed concern over the government’s proposed merchant discount rate (MDR) on UPI transactions above ₹00red to move to ₹2. 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 MDR on UPI, pointing out that the digital payments system had helped reduce their costs in terms of ATMs and other infrastructure. “The UPI transaction fee is most unfortunate. It is a humiliating achievement for Bharat, which has global appeal. Policymakers have failed to reduce logistics costs because of UPI, which makes Bharat more competitive,” he said.

He also argued that cyber security costs should not be cited as a reason for the levy, saying such expenses are part of banks’ normal operations.

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

The Finance Ministry has also clarified that they will not pay UPI payments to customers. It said MDR is a fee within the merchant payment ecosystem, not a fee imposed on users. UPI users will continue to have unlimited free usage, without monthly quotas or transaction limits, the ministry said.

“The question is, why do they?” Mr. Mahajan said even bigger merchants should not be taxed for accepting UPI payments.

In an interview with The Hindu, Mr. Mahajan referred to the concerns raised in a recent article on the United States Trade Representative and India’s zero MDR scheme. The SJM co-convener said the government should not change its policy due to such pressure. He said the growth of UPI has curtailed the business of international card networks like Visa and Mastercard and helped India save on outgoing foreign exchange. “The government should look at the wider savings generated by UPI before proceeding with the proposed fee,” he added.

Published – 16 Sep 2026 18:10 IST