New Delhi, India – The government moved to end speculation over potential fees on UPI transactions on Saturday, issuing a strong clarification that consumers will not have to pay any charges for using the Unified Payments Interface. In a detailed statement, the government emphasized that the vast majority of merchant transactions will also remain free, with any future Merchant Discount Rate (MDR) being limited to a small set of high-value merchant payments. The clarification comes after the Lok Sabha passed a bill amending the Payment and Settlement Systems Act, 2007, which sparked debate over whether the government was preparing to impose charges on the ubiquitous digital payments platform.
The government explained that the proposed change to Section 10A of the law is an “enabling provision” and does not itself impose an MDR. If Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026, the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), will decide on any MDR. Any future MDR, the government said, would be threshold-based, applying only to transactions above a specified limit, and at a nominal rate lower than typical debit and credit card MDRs. All person-to-person UPI transactions will continue to be free, and the “vast majority” of merchant payments will also remain free.
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The proposed framework is aimed at ensuring UPI’s long-term sustainability as transaction volumes surge. With UPI processing 2,366 crore transactions worth ₹29.9 lakh crore in July 2026 alone, the system requires continuous investment in cybersecurity, fraud prevention, and infrastructure. The government noted that reliance on subsidies alone is not viable for the next wave of growth, and a balanced framework is needed to keep UPI robust, inclusive, and future-ready. The statement also dismissed concerns about external influences driving policy changes, calling them “unfounded, completely false and misleading,” and reiterating that UPI is India’s own innovation. The government remains committed to keeping UPI free for citizens while ensuring its sustainability for decades to come.
