New Delhi, September 17, 2026 (Yes Punjab News)
The Centre on Thursday rejected allegations that the introduction of Merchant Discount Rate (MDR) on select UPI transactions was the result of external pressure, describing the claims as “patently false and misleading”.
In a statement, the Finance Ministry’s Department of Financial Services referred to the 2026 report of the US Trade Representative (USTR) and said the issues raised in the report were being incorrectly linked to the government’s decision on MDR.
The Department also released a copy of the USTR report cited in the allegations.
According to the Finance Ministry, the USTR report raised two issues concerning the UPI ecosystem.
The first related to the participation of US electronic payment service providers in UPI, including credit transactions, on a level playing field with RuPay.
The ministry pointed to an NPCI circular dated September 15, 2026, which does not permit credit transactions on UPI through credit cards other than RuPay credit cards.
The government said the policy of allowing RuPay credit cards on UPI was aimed at enabling them to become a preferred credit-card option among users in India.
The second issue cited by the USTR concerned the 30 per cent market-share limit for third-party application providers (TPAPs), announced by NPCI in November 2020 and scheduled for enforcement in December 2026.
The Finance Ministry said that although NPCI had mandated the 30 per cent limit in 2020, its implementation had not been possible because companies other than market leaders lacked a self-sustaining revenue model to compete effectively.
The government contended that introducing MDR on select high-value transactions would create a sustainable revenue model for smaller companies, enabling them to compete for a larger share of the UPI ecosystem.
The Finance Ministry said the move was therefore intended to facilitate the expansion of more domestic companies in the digital payments space.
“Contrary to misleading claims made that MDR has been introduced under external pressure, the introduction of MDR on select high-value transactions will enable more domestic companies to operate under UPI,” the ministry said.
It added that the measure was aimed at protecting India’s sovereignty in the electronic payments ecosystem.
The government also highlighted its efforts to promote RuPay credit and debit cards as domestic alternatives. It said debit-card transactions had been kept outside MDR to support the continued growth of RuPay credit cards.
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