The government refuted the allegation in a section of the media that the MDR on UPI transactions has been introduced because of external pressure, while referring to a US Trade Representative (USTR) report of 2026.
According to a statement issued by the Finance Ministry’s Department of Financial Services, “the allegation that MDR has been introduced under any external influence is patently false and misleading”.
The Department has also released a copy of the USTR report cited in the allegation.
The USTR report has raised two issues: First, the inability of US electronic payment services suppliers to participate in the UPI ecosystem, including credit transactions on UPI, on a level playing field with RuPay.
The NPCI circular of September 15, 2026 does not allow credit transactions on UPI by any credit card other than a RuPay credit card. There is a clear policy of only allowing RuPay credit cards on UPI to enable RuPay credit cards to become the preferred choice of credit cards amongst users in India, the official statement said.
The second issue is the NPCI market-share limitation of 30 per cent for third-party application providers (announced November 2020; enforcement date December 2026)
Although the NPCI had mandated a market share limitation of 30 per cent for third-party application providers in November 2020, this mandate could not be implemented because companies other than the market leaders could not compete in the absence of a self-sustaining revenue model.
Introduction of MDR on select high-value transactions will provide a self-sustaining revenue model to smaller companies to compete for a higher share in the UPI ecosystem. Thus, the introduction of MDR has been done with the intention of allowing more domestic companies to expand their operations, the Finance Ministry statement contends.
“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. Thus, the action of introducing MDR is a step in protecting India’s sovereignty in the electronic payment ecosystem,” it said.
The government of India has promoted RuPay credit and debit cards to show that people have a strong domestic alternative. In order for the RuPay credit cards to continue to grow, the debit card has been kept free of MDR, the statement added.
