FM Dismisses Allegations Of Levying MDR On UPI Transactions Under External Pressure
Sitharaman told a leading Delhi-based news agency that the decision was completely professional, and it was taken jointly by the National Payments Corporation of India (NPCI), payment banks and merchant banks, and not imposed by the government
New Delhi: Union finance minister Nirmala Sitharaman has rejected the allegations by the Opposition that the decision to levy a 0.4 per cent Merchant Discount Rate (MDR) on specified UPI transactions above Rs 2,000 was taken under external pressure, saying that it was 'absolutely baseless', rather it was a professional decision by the payment ecosystem.
Sitharaman told a leading Delhi-based news agency that the decision was completely professional, and it was taken jointly by the National Payments Corporation of India (NPCI), payment banks and merchant banks, and not imposed by the government. However, she rubbished the Opposition's allegations that the government had yielded to foreign pressure, saying the MDR was not a tax and would not accrue to the government.
“Absolutely baseless. And I totally deny it," she said when asked about Opposition allegations that the decision on Unified Payments Interface (UPI) MDR was taken under external pressure, particularly from the US. The Opposition was ‘searching for issues’ and making allegations without fully understanding the matter,” the finance minister said.
Also dismissing criticism by Opposition parties, including the Congress, that it is a tax on consumers, Sitharaman said, ‘this is not a tax, this is not a cess, this is not even a surcharge. And the collection is not coming to the Consolidated Fund of India.”
The collected amount, she said, will be shared among banks and other entities in the UPI ecosystem. “Of the MDR collected, 40 per cent will go to customers' banks, 30 per cent to payment gateways, 20 per cent to the UPI app and the remaining 10 per cent to the sponsoring bank of the UPI app,” she added.
From October 15, a 0.4 per cent MDR will apply to person-to-merchant UPI payments above Rs 2,000. The charge will be paid by merchants, not consumers, and will be capped at Rs 300 for transactions of Rs 75,000 or more. Payments between individuals, as well as the vast majority of everyday merchant payments, will remain free.
