RSS-affiliated group opposes government's proposed fee on UPI payments above ₹2,000

The Swadeshi Jagran Manch has urged the government to reconsider its proposal to levy a Merchant Discount Rate on UPI payments above ₹2,000, arguing that the digital payments system has already driven down banking costs and that the charge is unjustified.

Ashwani Mahajan, co-convener of the Swadeshi Jagran Manch (SJM), the economic wing of the Rashtriya Swayamsevak Sangh (RSS), 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.

UPI has reduced banking infrastructure costs, says SJM

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.

Government's proposal and clarifications

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.

Even large merchants should not be charged, argues Mahajan

"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.

Source: The Hindu