The Department of Financial Services on Thursday rejected opposition claims that Washington pressured New Delhi into imposing merchant fees on Unified Payments Interface, insisting the September 15 NPCI circular keeps international credit cards off UPI entirely while promoting RuPay.
What the ministry posted
In a social-media statement, the department said the NPCI framework allows credit-on-UPI only for RuPay cards, contradicting the U.S. Trade Representative's 2026 report, which described Indian rules as uneven for American payment firms. Officials said claims of external influence on the 0.4 per cent merchant discount rate were, in the ministry's words, without basis.
Congress leaders had argued that merchant fees above ₹2,000 betrayed consumers; the ministry countered that consumers still pay zero on those tickets and that merchants—not shoppers—bear the MDR where it applies. Essential services face a flat ₹5 charge per qualifying transaction instead of the percentage fee.
Trade politics versus payment policy
The spat matters because USTR reviews feed into broader bilateral trade conversations at a moment when India markets itself as a digital public infrastructure exporter. Allowing Visa or Mastercard credit on UPI would require network agreements, dispute-liability splits and interchange caps that NPCI has not approved.
RuPay debit cards remain free of MDR, a line the Payments Council of India reiterated in interviews this week. The policy goal is to keep low-value cash replacement free while charging large-ticket account transfers that issuers and acquirers say have been loss-making for six years.
Parliamentary fallout
Opposition members are likely to press the finance minister in the winter session for written answers on USTR meetings. The government's defence rests on sovereignty over retail payment rails: foreign schemes can still compete on card networks and contactless terminals, but UPI's architecture stays domestically controlled.
Whether merchants pass through the October 15 MDR will be a state-level consumer affair; politically, the Centre has drawn a bright line that RuPay—not diplomatic correspondence—dictates who rides India's fastest-growing rail.
What opposition parties want
Parliamentary questions filed this week ask whether trade negotiators discussed payment rails in side letters. The government has not published any such correspondence, relying instead on the public NPCI circular and the DFS social-media thread as the authoritative record.
State finance ministers from opposition-run governments have separately asked whether the MDR will push small merchants back to cash; the Centre points to the sub-₹2,000 exemption and flat ₹5 charges on essentials as safeguards. Those debates will continue in state assemblies even if the Lok Sabha moves on.
Market access arguments
U.S. payment firms argue that RuPay-only credit on UPI blocks competition; Indian officials respond that foreign debit and credit cards remain widely accepted on point-of-sale terminals and that UPI was built as a domestic account rail. The dispute is unlikely to end with Wednesday's statement—it will reappear in the next trade policy review.