UPI MDR decision driven by technical merit, not foreign pressure: FM

Finance Minister Nirmala Sitharaman on Tuesday firmly rejected allegations that the government had succumbed to external pressure in its recent decision on Merchant Discount Rates for Unified Payments Interface transactions, asserting that the policy shift was driven entirely by professional and technical considerations.

Addressing parliamentary concerns, Sitharaman emphasised that the MDR framework was formulated based on merit and operational requirements of the payments ecosystem, rather than any external influence. She reiterated that MDR charges do not constitute a tax and therefore do not generate revenue for the government, countering suggestions that the decision represented a policy reversal under international pressure.

The Finance Minister's clarification comes amid opposition criticism of the government's stance on UPI transaction costs. She stressed that policy decisions regarding the digital payments infrastructure are made through rigorous institutional processes involving relevant regulatory bodies and stakeholder consultations.

The MDR structure has been a point of contention between the government, fintech companies, and banking sector stakeholders, with various parties advocating different approaches to sustain the country's digital payments ecosystem while balancing merchant and consumer interests.