Thiruvananthapuram, Oct 15 The Keralam Legislative Assembly on Thursday passed a motion urging the central government to completely withdraw the proposed Merchant Discount Rate (MDR) on UPI transactions above Rs 2,000.
Chief Minister V D Satheesan, supporting the motion by CPI MLA and former state minister K Rajan, said that while the MDR was not a tax, its economic impact was akin to taxation.
He said that such a decision when the country was going through a phase of extreme inflationary pressure on our economy, was not at all beneficial to the nation.
“The timing of this is extremely wrong. It will increase the cost of business which in turn will ultimately land on the consumers. There is no doubt about that,” he contended.
He claimed that imposing the fees will reduce the attractiveness of the digital payment system.
“It will seriously affect the small and medium businesses,” he added.
Rajan, in his motion, claimed that imposing commission or fees on UPI transactions would hurt common citizens and small businesses.
The National Payments Corporation of India (NPCI) introduced a 0.4 per cent MDR for person-to-merchant (P2M) UPI transactions exceeding Rs 2,000 and was going to implement it from October 15, but pushed the date to after Diwali following major pushback from various merchants and businesses.
Rajan said that the UPI system has spread from big businesses to small shops and autorickshaw drivers because it makes monetary transactions easier, eliminating the need to carry out large amounts of cash or going through bank procedures.
“In the 2025-26 financial year alone, over 24,000 crore transactions totaling Rs 314 lakh crore were carried out in the country,” he said.
He claimed that the UPI system was being turned into a profit-making mechanism as part of the Narendra Modi government’s “corporate friendly” economic policies and the MDR was being imposed to cater to the interests of American financial services companies like Visa and Mastercard.
Rajan further claimed that the Donald Trump administration also exerted pressure on the central government to impose the MDR as the free UPI transactions were affecting the market of American financial services companies.
Supporting the motion, UDF and LDF MLAs said that it would lead to generation of black money as merchants would avoid billing large transactions.
They claimed that over Rs 12,000 crore would reach American companies through the imposition of the MDR.
It can lead to a major price increase, they added.
LDF MLAs also alleged that Congress MPs who were present in the Parliamentary Standing Committee on Finance and MDR did not object to the levy of the fees.
The BJP opposed the motion, with its legislative party leader B B Gopakumar claiming that it would not affect the general public or small merchants as the MDR is not levied on transactions upto Rs 2,000.
(PTI News)
