Jammu and Kashmir Chief Minister Omar Abdullah has backed the Centre’s decision to introduce a 0.4 per cent merchant discount rate (MDR) on UPI payments above Rs 2,000, arguing that operating the country’s digital payments infrastructure comes at a significant cost.

Speaking to reporters, Omar said consumers should not be charged for UPI transactions, while expressing no objection to companies paying the merchant fee. He also said people often fail to appreciate services that are provided to them free of cost.

Omar Abdullah Defends UPI Merchant Charges

Explaining his position, Omar said UPI charges would not apply to all transactions. Person-to-person transfers will remain free, while individual consumers will not be charged unless they cross the specified ceiling limit.

“Not everyone is charged. First of all, person-to-person money transfers are not charged. After that, individual consumers will not be charged unless they cross a certain ceiling limit. As far as I understand, running this UPI system is not cheap. It takes a lot of money to run it. And the truth is, we don’t properly appreciate what we get for free,” J&K CM said.

He said the government should ensure that consumers are protected from the additional cost, while merchants and companies could absorb the charge.

“The government should ensure that the general public is not charged these fees. If a company is charged, I have no objection because companies make good money through UPI anyway,” he added.

Opposition Raises Concerns Over UPI MDR

Omar’s comments come amid criticism from the Opposition over the introduction of MDR on certain UPI transactions. Opposition leaders have raised concerns that merchants could eventually pass the additional cost on to consumers.

Leader of Opposition in the Lok Sabha Rahul Gandhi had earlier targeted the Centre over the move and accused Prime Minister Narendra Modi of imposing a burden on Indians through UPI charges.

“Modiji has a completely diff concept, he’s neither left or right he has decided to completely lie down straight and in front of Donald Trump. He’s put a tax on every single Indian person by taxing UPI and giving huge amount op money to the United States,” the former Congress president added.

New UPI MDR Rules From October 15

The new MDR framework is scheduled to take effect from October 15. According to the Centre, UPI payments between individuals, including transfers made to friends, will not attract the merchant charge.

The Union Finance Ministry has also sought to address concerns over the possibility of merchants transferring the cost to customers. It said banks had been instructed to ensure that merchants do not pass MDR charges on to consumers.

“UPI application providers are expressly prohibited from imposing platform fees or hidden charges,” the Finance Ministry said.

The Centre’s position is that the new framework applies to specified merchant transactions, while person-to-person UPI transfers remain outside the MDR structure. The debate over the move has centred on how the charges will be absorbed and whether consumers could ultimately face higher costs when making eligible merchant payments.

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