Critics warn 0.4% UPI charge will push shoppers back to cash
New Delhi, September 17 — A proposed 0.4 percent levy on merchant UPI transactions exceeding two thousand rupees has ignited a political firestorm. Leaders from the Congress, JD(U), RJD and DMK argue that the fee will serve as an extra financial strain on low‑income households and small shop owners.
Congress representative Shakil Ahmed emphasised that the government first cultivated a culture of digital payments, encouraging phone‑based transfers and seamless deliveries, only to now impose a charge on the very system it promoted. He drew parallels with the GST implementation and the 2016 demonetisation, suggesting that those initiatives failed to yield tangible benefits for the poor.
RJD MP Manoj Jha, speaking from Patna, used the example of a modest street vendor who sells everyday essentials such as mustard oil, lentils, salt, onions and potatoes. Jha warned that a profit margin of just a couple of rupees per item could be eroded by the new fee, effectively penalising those who already operate on thin margins.
N. K. Premchandran of the RSP, speaking in Tiruvallur, warned that while the government states the charge is levied on merchants, the ultimate burden will fall on customers. He argued that merchants will inevitably pass the cost onto buyers, raising retail prices and fueling inflation.
DMK spokesperson T. K. S. Ilangovan in Chennai questioned the rationale of taxing a payment service. He noted that merchants already fulfil tax obligations and other statutory payments; the additional 0.4 percent appears redundant and could discourage digital adoption.
Opposition parties claim the levy contradicts the Digital India agenda, fearing that it will compel consumers to revert to cash transactions. The ruling coalition maintains that the surcharge is limited to merchant transaction values and will not affect end‑users directly. Nonetheless, critics warn that increased merchant expenses will be transferred to consumers, exacerbating price pressures across the economy.