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The Congress on Wednesday accused the government of yielding to US pressure by introducing a Merchant Discount Rate (MDR) on certain UPI transactions, demanding that the decision be withdrawn and the digital payments system remain free.

Taking a swipe at Prime Minister Narendra Modi, Congress general secretary in-charge communications Jairam Ramesh said he had “redefined NOTA -- Narendra's Ongoing Trump Appeasement”.

The Congress alleged that the move was aimed at benefiting US-based card companies at the expense of Indian users and merchants.

Ramesh questioned whether the proposed MDR was intended to help companies such as Visa and Mastercard compete with UPI, citing earlier criticism of the zero-MDR system by the US Trade Representative.

“Here, the Modi government has given into a US demand to get rid of zero MDR and charge for UPI. The U.S. Trade Representative earlier this year criticized UPI for being free and having driven out Visa and Mastercard,” Ramesh said in a post on X.

“Why 0.4% MDR? Is it because debit card MDR is also 0.4%? Is this being done to enable US card companies to compete with UPI?” he asked.

Ramesh also referred to proposed US tariffs on Indian goods and measures affecting Indian immigrants, including higher H-1B visa costs, while questioning the government's decision to introduce MDR.

He said the estimated annual cost of running the UPI ecosystem was around Rs 20,000 crore and argued that this was less than 10 per cent of the amount the Reserve Bank of India had transferred to the Union government in recent years.

In another post, Ramesh described the MDR move as “2017 GST Redux”.

At a press conference, Congress spokesperson Supriya Shrinate said commercial UPI transactions above Rs 2,000 would attract a 0.4 per cent fee and claimed the move would ultimately burden ordinary Indians.

She alleged that the decision had been taken at the behest of the US, where companies including Mastercard and Visa had long sought higher MDR.

Shrinate also pointed to PhonePe and Google Pay, alleging that their ownership structures meant US companies would be among the beneficiaries of higher merchant-payment revenues.

She said the government had introduced the Taxation and Other Laws Amendment Bill in August to enable MDR on UPI and alleged that Finance Minister Nirmala Sitharaman had told Parliament on August 6 that no decision on MDR had been taken.

Shrinate said a notification issued late on September 14 imposed MDR on commercial UPI transactions above Rs 2,000 from October 15.

The Congress demanded withdrawal of what it called an “anti-national” decision and asked why the government and RBI could not bear the cost of running UPI.

The remarks came a day after the government announced a 0.4 per cent MDR on merchant transactions above Rs 2,000 made through UPI, while explicitly keeping person-to-person payments and small-value transactions free.

The Finance Ministry said customers would not have to pay any charge when making such payments through UPI.

“MDR is a charge within the merchant payment ecosystem. It is not a charge on customers making UPI payments,” the ministry said.

It also said individuals would continue to have unlimited free usage of UPI, with no monthly quotas, volume restrictions or tiered caps on free transactions.

The BJP hit back at the Congress, accusing it of spreading “fake news” and reiterating that MDR charges would not be levied on consumers.