Mayawati calls UPI merchant fee 'capitalist profiteering', warns of burden on common people

Bahujan Samaj Party (BSP) chief Mayawati on Friday criticised the Union government's decision to levy a 0.4% fee on Unified Payments Interface (UPI) payments of more than ₹2,000 made to merchants, describing it as, prima facie, a "capitalist profiteering attitude" that recovers tax from the people "with both hands". The charge is set to take effect from October 15.

In a post on X in Hindi, Ms. Mayawati said the government had vigorously promoted UPI digital transactions in the beginning, and its decision to now levy a fee on those same transactions had naturally caused unease and outrage among the public.

She said people were unwilling to accept a system that places an additional financial burden on them in the form of a "tax". Whatever name is given to the arrangement, she said, it would ultimately burn a hole in the pockets of ordinary people and increase their expenses.

"It is well known that the vast majority of the country's population is tormented by extreme poverty, rampant inflation and the like, and their children are affected by illiteracy, unemployment, disorder and so on," Ms. Mayawati said.

"In such circumstances, it would be appropriate for the government's policies and action plans to prioritise welfare over commercial profit-making. If the government does not concern itself with the public hardships and sufferings, then who will?" she said in the post.

The fee, known as the merchant discount rate (MDR), ends nearly six years of free UPI payments. The government announced the decision on Tuesday, and the charge will apply from October 15 to transfers of more than ₹2,000 made to merchants through the platform. Everyday person-to-person transfers and small payments have been explicitly ring-fenced from any charge.

The Finance Ministry said customers would not be required to pay any charge when making payments through UPI. "MDR is a charge within the merchant payment ecosystem. It is not a charge on customers making UPI payments," it said in a statement. Individuals would continue to have "unlimited free usage, with no monthly quotas, volume restrictions or tiered caps on free UPI transactions", it added.

The government has also denied that foreign pressure lay behind the decision on MDR, stating that the charge will help Indian UPI applications.

UPI has grown into the country's most widely used retail payment system, handling everyday payments for households, small shops, street vendors and large merchants alike. Its expansion had, until now, rested on a model in which neither customers nor merchants paid a fee for transactions on the platform, with the costs of running the system met through other means.

The move has drawn sharp criticism from opposition parties, who have argued that any charge on digital transactions places an additional burden on users and could discourage the shift away from cash. The government, for its part, has maintained that the charge applies only within the merchant payment ecosystem and leaves ordinary customers untouched, and that it is limited to transactions above the ₹2,000 threshold.

With the October 15 date approaching, the debate now turns on how the fee will be applied in practice, how merchants respond to it, and whether it alters the pattern of digital payments that has become part of daily life for crores of Indians.