3 weeks ago
No UPI charges for users; limited merchant MDR likely: Govt
The government of India made an announcement to help people who pay with their phones.
UPI is a way people send and receive money using their phones.
Some people were worried that using UPI would cost extra money.
The government said, 'Don't worry!'
Regular people will not have to pay any extra fees.
When you send money to a friend or family member, it stays completely free.
The government said any fees would only affect some businesses.
Those fees would only apply when a business makes very large sales.
Any fee would be much smaller than what banks charge for credit or debit cards.
So almost all everyday payments will stay free for everyone.
The Union government and the Finance Ministry clarified that ordinary consumers will not be charged for making UPI payments.
All person-to-person (P2P) UPI transactions will continue to remain entirely free of charge.
Any future Merchant Discount Rate (MDR) would apply only to a limited set of merchant transactions above a specified threshold, at a nominal rate.
Proposed charges would be significantly lower than the MDR applicable to debit or credit card transactions.
The clarification follows debate over an amendment to the Payment and Settlement Systems Act, 2007, under the Taxation and Other Laws (Amendment) Bill, 2026, with an NPCI-headed committee to decide on any MDR.
- Who
- The Union government of India and the Finance Ministry, with a UPI and Services Steering Committee headed by the National Payments Corporation of India (NPCI) to decide on any future MDR.
- What
- Clarified that ordinary UPI users and all P2P transactions will face no charges, while any future Merchant Discount Rate would apply only to select merchant transactions above a threshold.
- Where
- New Delhi.
- When
- Saturday, in response to recent debates over legislative adjustments.
- Why
- To clear public confusion over the amendment to the Payment and Settlement Systems Act, 2007, and to ensure the long-term sustainability, technological development and resilience of the UPI ecosystem.
Concerns over possible UPI charges
Government's clarification and reassurance
Impact of legislative amendment
Concerns over possible UPI charges
Concerns have been raised over a recent amendment to the Payment and Settlement Systems Act, 2007, with fears about the possibility of charges being imposed on UPI users.
Government's clarification and reassurance
The government says the amendment is an enabling provision aimed at ensuring long-term sustainability, technological development and resilience of the UPI ecosystem, and that consumers and P2P transactions will not be charged.
Scope of merchant discount rate
Concerns over possible UPI charges
The debate over the amendment has raised concerns that UPI transactions could incur charges, prompting the government clarification.
Government's clarification and reassurance
The government says there will be no blanket MDR on merchants; any future charge would apply only to a limited set of merchant transactions above a threshold at a nominal rate.
Key facts
- Payment System
- UPI (Unified Payments Interface)
- Consumer Charges
- None for ordinary UPI users
- P2P Transactions
- Entirely free of charge
- Merchant Discount Rate (MDR)
- Only for select merchant transactions above a specified threshold, at a nominal rate
- MDR Comparison
- Significantly lower than debit or credit card MDRs
- Related Legislation
- Amendment to the Payment and Settlement Systems Act, 2007, under the Taxation and Other Laws (Amendment) Bill, 2026
- Decision Body
- UPI and Services Steering Committee, headed by NPCI
- Announcement Location
- New Delhi
Quotes
Finance Ministry
India's Ministry of Finance
“"If introduced, MDR charges will apply only to a limited set of merchant transactions above a certain threshold and at a nominal rate,"”
thehansindia.com
Sources
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