Congress MPs Backed Tiered UPI Revenue Model In Parliamentary Panel Meeting, Says Govt
· Free Press Journal
Five Congress MPs, including former finance minister P Chidambaram, were present when the Parliamentary Standing Committee on Finance approved a report recommending a tiered revenue mechanism for UPI, with no dissent recorded in the published proceedings.
The development comes amid a political dispute over the Centre’s decision to introduce a 0.4% Merchant Discount Rate (MDR) on specified merchant UPI transactions above Rs 2,000 from October 15. Person-to-person UPI payments will continue to remain free.
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The five Congress MPs present during the adoption of the report on August 12 included P Chidambaram, Manish Tewari, Gaurav Gogoi, Kishori Lal and K Gopinath, according to a government functionary.
The government has referred to the committee’s recommendations while responding to Congress leader Rahul Gandhi’s criticism of the MDR framework.
“Why is Rahul Gandhi opposing something his own MPs, including former finance minister P Chidambaram and former minister in the UPA government Manish Tewari, supported within the parliamentary panel," the functionary said.
Gandhi has opposed the move, alleging that the decision would benefit US-based payment companies. The government has rejected claims of foreign influence and said the MDR is not a consumer charge.
Panel highlights UPI sustainability concerns
The Standing Committee on Finance, chaired by BJP MP Bhartruhari Mahtab, recommended introducing a tiered MDR or revenue model for UPI and said it should be implemented without delay.
The committee highlighted concerns over the long-term financial sustainability of the UPI ecosystem, noting that government support may not be sufficient to cover operational expenses, including cybersecurity, fraud prevention and infrastructure investments.
“The Committee note the massive Rs 2000 crore budgetary allocation for 2026-27 designed to offset ecosystem costs caused by the zero-MDR policy on RuPay and low-value UPI transactions," the report stated.
It further said UPI’s expected growth in transaction volumes and users required a sustainable funding structure.
The committee emphasised that a viable revenue mechanism would help reduce dependence on government subsidies while allowing digital payments to expand across smaller cities and towns.
Under the new framework, MDR will apply only to specified merchant transactions above Rs 2,000 and will be paid within the payment ecosystem rather than by consumers.