3 weeks ago
UPI Remains Free for Users, Nominal Merchant Fee Possible: Govt
The government of India made an announcement about UPI, a very popular way people pay using their phones in India.
It said regular people will never have to pay extra money just to use UPI.
Sending money to family and friends will also stay completely free.
Most small shops and businesses will not have to pay a fee for the payments they receive.
In a few special cases, very large business payments might come with a tiny fee.
That fee would be much smaller than the fees charged for credit or debit cards.
The announcement came because people were worried after a new law was passed in Parliament.
The government said the law will help make UPI stronger, safer, and better protected against fraud.
It also said reports that other countries forced this change are not true.
UPI payments will remain completely free for consumers, and all person-to-person transactions will continue to be free, the Ministry of Finance said on Saturday.
Any future Merchant Discount Rate (MDR) would apply only to a limited set of merchant transactions above a threshold, at a nominal rate far lower than debit or credit card MDRs.
The clarification follows the Lok Sabha's August 6 passage of the Taxation and Other Laws (Amendment) Bill, 2026, which proposes amending Section 10A of the Payment and Settlement Systems Act, 2007.
Once Parliament passes the Bill, the 'UPI and Services Steering Committee' headed by NPCI will decide on any MDR, as neither the rate nor threshold has been set yet.
UPI processed 2,366 crore transactions worth Rs 29.9 lakh crore in July 2026 and is live in 11 foreign countries; the government rejected external influence claims as 'unfounded, completely false and misleading.'
- Who
- The Ministry of Finance (Government of India) and the 'UPI and Services Steering Committee' headed by the National Payments Corporation of India (NPCI), responding to concerns from UPI users and merchants.
- What
- Clarified that UPI consumers and all person-to-person transactions will remain free, while any future Merchant Discount Rate (MDR) would apply only to a limited set of merchant transactions above a threshold at a nominal rate.
- Where
- India (the Finance Ministry statement was issued from New Delhi).
- When
- Saturday, August 8, 2026, two days after the Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026 on August 6.
- Why
- To reassure users, ensure UPI's long-term sustainability, technological advancement, cybersecurity and resilience, and counter misinformation about transaction charges and external influence.
Concerned users and critics
Government of India
Possibility of charges on UPI transactions
Concerned users and critics
Concerns were raised that the amendment to the Payment and Settlement Systems Act, 2007 could lead to charges being imposed on ordinary UPI users and small merchants.
Government of India
The government says consumers will not be charged for UPI payments, all person-to-person transactions remain free, and any future MDR would apply only to a limited set of merchant transactions above a threshold at a nominal rate far lower than card MDRs.
Reasons behind the policy changes
Concerned users and critics
Reports suggested that external political and commercial pressures were driving the proposed policy changes.
Government of India
The government rejected such claims as 'unfounded, completely false and misleading,' saying the amendment is an enabling provision for UPI's long-term sustainability, technological advancement, and resilience against emerging risks.
Key facts
- Consumer charges
- No charges for UPI users; all person-to-person (P2P) transactions remain free
- Merchant MDR
- No blanket MDR; if introduced, applies only to select merchant transactions above a threshold at a nominal rate
- Card MDR comparison
- Credit cards face MDR of 1-3%; debit cards up to 0.9% of transaction value
- Related legislation
- Amendment to Section 10A of the Payment and Settlement Systems Act, 2007; part of the Taxation and Other Laws (Amendment) Bill, 2026
- MDR decision body
- 'UPI and Services Steering Committee' headed by the National Payments Corporation of India (NPCI)
- July 2026 UPI volume
- 2,366 crore transactions worth Rs 29.9 lakh crore
- International presence
- UPI live in 11 foreign countries; several others have expressed interest
- External influence claims
- Government rejected reports as 'unfounded, completely false and misleading'
Quotes
Indian Finance Ministry
The Indian Ministry of Finance
“Consumers making payments will not face any transaction charges, and all person‑to‑person transactions will continue to be free of charge. With exponential transaction volumes, the system requires significant and continuous upgrades in cybersecurity, fraud prevention, and infrastructure.”
financialexpress.com
rediff.com
“"As and when MDR charges are introduced, they will apply only to a limited set of merchant transactions, above a certain threshold, at a nominal rate, far lower than debit or credit card MDRs,"”
wionews.com
telegraphindia.com
thehansindia.com
Sources
No UPI fee for users, select merchant transactions may face charges: Govt
UPI Payments To Remain Free For Users, Govt May Allow Nominal Merchant Fees Later
No UPI charges for users, but nominal MDR may apply to select merchant payments: Govt - Telegraph India
No charges for UPI users, small merchants: Govt
UPI free for citizens, merchants may face ‘nominal’ fee: Government
UPI To Remain Free For Consumers, Merchants May Face Small Fee: Centre
Will UPI Payments Be Charged? 7 FAQs Every User And Shopkeeper Should Know The Answers To
No charges on UPI transactions for users, limited merchant MDR possible: Govt
UPI payments to remain free, charges to apply only on...: Govt
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