Congress- Challenges Government Over Proposed Changes to UPI Payment Law
Congress- Congress leader Jairam Ramesh has questioned the government’s proposed amendments to digital payment laws, arguing that legal protections should not be replaced by policy assurances.
Finance Minister Nirmala Sitharaman and Congress leader Jairam Ramesh have exchanged sharp views over the Taxation and Other Laws (Amendment) Bill, with the opposition raising concerns that the proposed changes could eventually affect the existing framework governing free UPI transactions. Ramesh responded to the finance minister’s remarks after she rejected his earlier criticism, maintaining that official statements or social media posts cannot replace safeguards written into law. He argued that the government’s explanation of the proposed legislation is based on several claims that require closer examination.
Debate Over Merchant Discount Rate
One of the central issues highlighted by Ramesh relates to the Merchant Discount Rate (MDR). While the finance minister has maintained that MDR is applicable only to merchants and not directly to customers, the Congress leader said the economic impact ultimately reaches consumers. According to him, businesses often recover operational costs by adjusting product prices or adopting different pricing models, making the burden indirect rather than absent.
He further noted that merchants are not limited to large commercial establishments. Small retailers, neighborhood grocery stores, and street vendors form a major part of India’s UPI ecosystem, and any additional transaction-related expense could have implications for these businesses.
Concerns About Protecting Public Digital Infrastructure
Ramesh also questioned the government’s argument that allowing MDR would enable banks and fintech companies to strengthen digital payment infrastructure, improve innovation, and enhance security. He said UPI was developed as a public digital platform designed to encourage widespread digital payments without transaction charges.
According to him, the absence of MDR has played a significant role in expanding digital payments among small businesses and local vendors. He suggested that alternative methods, including financial support through the Reserve Bank of India, could be explored to strengthen the payment ecosystem without introducing additional costs for merchants or consumers.
Legal Protection Versus Government Assurances
Another point raised by the Congress leader relates to the legal status of zero-MDR provisions. He argued that the amendment would remove the statutory protection currently available under Section 10A and instead leave future decisions on payment charges to government notifications.
Ramesh maintained that legislation should provide long-term certainty rather than depend on future administrative decisions. In his view, statutory guarantees offer stronger protection than public assurances, especially when policy positions may evolve over time.
International Context and Market Competition
The Congress leader also linked the proposed amendment to broader developments in the international digital payments landscape. He referred to observations made in the 2026 National Trade Estimate Report issued by the Office of the United States Trade Representative, which discussed India’s UPI and RuPay systems alongside Brazil’s Pix platform.
Ramesh claimed that while Brazil has continued to support its domestic payment infrastructure, India is proposing changes that could weaken existing legal safeguards. He further pointed out that Google Pay and Walmart-owned PhonePe together account for a substantial share of UPI transactions, arguing that public digital infrastructure should be strengthened at a time when foreign-controlled platforms already hold a dominant market position.
Parliament Procedure Also Draws Criticism
Apart from the policy debate, Ramesh criticised the manner in which the Bill was passed in the Lok Sabha. He said the issue deserved detailed parliamentary discussion rather than being approved through a voice vote shortly after its introduction.
He also alleged that the ongoing disruption in Parliament resulted from the government’s refusal to address the opposition’s demand for a statement from the Home Minister regarding the June 20 police action involving students. According to Ramesh, ministers have a constitutional responsibility to answer questions in Parliament, and greater accountability would have allowed wider discussion on the proposed legislation.
Earlier, Finance Minister Nirmala Sitharaman had stated that the Steering Committee on UPI and Services, headed by the National Payments Corporation of India (NPCI), has not yet taken a final decision on MDR. She said any such decision would be considered only after Parliament approves the Taxation and Other Laws (Amendment) Bill, 2026. The proposed legislation would empower the central government to notify which electronic payment modes or transactions would continue to remain free.