'This ₹2,000 MDR Limit Is Bogus'

'These limits will change. Very soon restrictions, restrictions will come.'

"Brazil refused to weaken Pix, its UPI-like public payment system, despite US pressure and an additional 25% tariff. India should have shown similar resolve," Ajay Srivastava, Founder, Global Trade Research Initiative, tells Rediff's Shobha Warrier in the concluding part of a two-part interview.

• Part I of the Interview: 'India Should Stop Listening To The US'

'India is imposing MDR because the US wants this.'

But we don't see India standing up. Look at what India has done on UPI to appease some US companies.

You are right.

UPI fees are not about revenue keeping. UPI fee costs the government an estimated ₹2,000 crore to ₹2,500 crore annually.

They are charging MDR for the expenditure.

What is the food subsidy? ₹2.03 lakh crore. Fertiliser subsidy? ₹1.68 lakh crore. ₹22,800 crore is the agricultural credit. ₹12,500 crore for petroleum and LPG.

So, ₹2,500 crore is pittance compared to all this.

Clearly, this is not a revenue problem.

Charging for UPI will not save public money.

RBI spent ₹4,875 crore in FY2026 on printing banknotes alone, excluding the cost of transporting, storing, guarding, counting and replacing cash.

MDR could push small merchants and price-sensitive consumers back towards cash.

The real pressure thus is not the need for revenue.

India is imposing MDR because the US wants this.

'India's UPI policies were hurting the US firms'

UPI is becoming the most dominant player in money transactions.

Of course, UPI is a big story.

You know, 88% of UPI transactions are handled by two US firms, PhonePe and GooglePay.

They are getting the data of 55 crore (550 million) Indians, their customer base. They can sell them to different services like insurance, health and so many other things.

They can use this data, financial data, the transitional data for AI development, which will fetch very big returns for them.

In fact, the Government of India should charge PhonePe and GooglePay, say a fee of 100 million dollars.

This ₹2,000 limit is all bogus. These limits will change. Very soon restrictions, restrictions will come.

I think last year, the finance ministry specifically said, there would be no MDR charges and what people were talking was bogus. Now we see charges.

After a few months, the charges will be applicable on more services.

Then RuPay will also be bought. Why? Because the US wants this.

IMAGE: Ajay Srivastava.

Why do I say the US wants it? There is this 2026 USTR document

It mentioned that India's UPI policies were hurting US firms, and that because of UPI and RuPay, their MasterCard and Visa were losing businesses.

It said free UPI and RuPay diverted billions of transactions away from Visa and Mastercard, which typically earnt network fees of 1% to 3% on card payments.

So, revenue is not the issue here.

Charging MDR is simply appeasing US interest.

Brazil refused to weaken Pix, its UPI-like public payment system, despite US pressure and an additional 25% tariff.

India should have shown similar resolve.

Who gains immediately?

PhonePe could be the biggest beneficiary.

The Walmart-owned company processes around 45% of UPI transactions. It was valued at $12 billion in 2023 but paused its India IPO in March 2026 after its estimated valuation reportedly fell below $10 billion.

Even a share of the MDR revenue could add billions of dollars to its IPO valuation.

PhonePe and Google Pay together process more than 80% of UPI transactions.

Amazon and other foreign platforms are also expanding.

India has already given American technology companies extraordinary access to UPI.

UPI is a big story.

Feature Presentation: Rajesh Alva/Rediff