New Delhi: The government on Saturday clarified that consumers will not have to pay any charges for making payments through the Unified Payments Interface (UPI), amid concerns over a proposed amendment that could pave the way for a Merchant Discount Rate (MDR).
The Finance Ministry said all person-to-person (P2P) UPI transactions will continue to remain free and there will be no blanket MDR imposed on merchants.
If MDR is introduced in the future, it will apply only to a limited number of merchant transactions above a specified threshold and at a nominal rate, the ministry said. The government also clarified that such charges would be significantly lower than the MDR currently applicable to debit and credit card transactions.
Why UPI Charges Became a Concern
The clarification follows a debate over a recent amendment to the Payment and Settlement Systems Act, 2007. Concerns had emerged that the proposed changes could eventually result in charges being imposed on consumers for using UPI.
The government said the amendment is only an enabling provision intended to support the long-term sustainability, technological development and resilience of the UPI ecosystem.
The proposed changes are part of the Taxation and Other Laws (Amendment) Bill, 2026.
Once Parliament passes the Bill, the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), will decide whether MDR should be introduced and, if so, the applicable rate.
Focus on UPI’s Long-Term Sustainability
According to the Finance Ministry, UPI’s rapidly growing transaction volumes require continuous investment in cybersecurity, fraud prevention and technology infrastructure.
The government said a sustainable revenue model would also help attract more companies to expand their operations in the UPI ecosystem and reduce its dependence on government subsidies.
UPI processed 2,366 crore transactions worth ₹29.9 lakh crore in July 2026 alone, highlighting the rapid expansion of India’s digital payments ecosystem.
UPI Expands Globally
The government said UPI is currently operational in 11 foreign countries, while several other nations have expressed interest in adopting the Indian digital payment technology.
It also rejected reports that external influences were behind the proposed policy changes, calling such claims unfounded and misleading.
The government reiterated that consumers should not be concerned about paying for UPI transactions, with P2P payments continuing to remain free.
