'We fail to appreciate what we get for free': Omar Abdullah backs UPI MDR charges

Jammu and Kashmir chief minister Omar Abdullah on Wednesday appeared to back the decision to impose a 0.4% Merchant Discount Rate (MDR) on UPI transactions exceeding ₹2,000 but also urged the government to ensure they are not passed on to customers.

In a media interaction in Srinagar, Abdullah said that as per his understanding, operating the UPI system in India costs a lot. “Also, the truth is that we often fail to properly appreciate things we get for free,” he added.

However, the National Conference leader also urged the government to ensure that the cost of this charge doesn't fall in consumers.

A day later, Abdullah reiterated support for the merchant fee, stating that businesses and not people will be charged with it. “The order that has now been issued clearly states that this charge cannot be transferred to the customer. Secondly, if you and I are sending money to each other, there will be no charge on that either,” Abdullah said on Thursday, as quoted by news agency PTI.

Abdullah sways from Congress stand

The J&K CM's support for the UPI charge comes at a time when the government is under fire from the Congress over it.

Congress leader Rahul Gandhi and several other Opposition leaders had said that the government succumbed to US pressure in making the decision, a claim denied by the finance ministry on Wednesday.

Swaying away from the Congress criticism, Abdullah underscored that operating the digital-payment infrastructure is not cheap, even as he urged the government to protect retail consumers.

Also Read: 'End of day consumer pays': Ashneer Grover questions UPI merchant fee, says 'call it tax'

In line with the government clarification on the UPI charge, Abdullah also said on Thursday that the fee won't apply to regular consumers. "If you and I are sending money to each other, there will be no charge on that either. There is no merchant charge on transactions below ₹2,000, because most of the business transactions are below ₹2,000. For transactions above ₹2,000, there is a charge, but a limit has also been set," he said.

Govt clarification on the UPI MDR charge

The 0.4% MDR on payments above ₹2,000 would not apply if you send money to a friend, family member or another individual, as per a government notification.

Also Read: New UPI rules: What to know about person-to-person payments, monthly quota

Automated recurring payments made through UPI mandates are also not covered by the prescribed MDR framework, meaning payments such as utility bills, OTT subscriptions and mutual fund instalments will not attract the new 0.4% MDR merely because they exceed ₹2,000.