Small vendors receiving up to Rs 1 lakh per month through UPI QR directly into their accounts won't face the MDR levy. (AI-generated image)The government has rubbished claims of ‘foreign influence’ in its decision to impose a 0.4 per cent MDR, or merchant discount rate, on UPI transactions over Rs 2,000. This MDR will be levied on payments to merchants only and will not impact person-to-person payments, the government stressed Wednesday.In an X post the Finance Ministry said: “Some claims suggest the change is due to foreign influence. This is false. India’s UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem.”The pushback came after the Congress accused the government of surrender to a ‘demand’ by the United States to impose a new charge on some UPI payments from October 15. Senior Congress leader Jairam Ramesh demanded to know if the move was intended to benefit American credit card companies. UPI Remains Free for ConsumersUPI continues to be free for customers. Sending money to friends, paying at shops, or scanning a QR code — all remain without charges.Key Facts:✅ No charges on P2P: Person-to-Person transfers are always free, regardless of amount.✅ Small… pic.twitter.com/PyQ7hotNMN— Ministry of Finance (@FinMinIndia) September 16, 2026Also Read | MDR charges announced: Who will pay how much for UPI transactionsIn response, the Finance Ministry said: “UPI continues to be free for customers. Sending money to friends, paying at shops, or scanning a QR code — all remain without charges.”The Finance Ministry issued a detailed note on the new charges, including assuring lakhs of UPI users across the country that ‘everyday payments are safe’, pointing out that over 95 per cent of merchant transactions are below the Rs 2,000 threshold that will invite the 0.4 per cent fee.Also Read | Why the government’s announcement of UPI fee mattersSmall merchants, the ministry also said, are ‘protected’ and vendors earning up to Rs 1 lakh per month via UPI QR codes will ‘continue to enjoy zero charges’.Only larger merchant transactions – i.e., above Rs 2,000 – will attract the fee and this will be borne by merchants, the government clarified. And in another critical clarification, the government also saidpayments for essential services – such as train ticket booking, fuel and telecom payments – would have a flat fee of Rs 5 per transaction above Rs 2,000