3 weeks ago
UPI Payments Remain Free for Consumers, PhonePe CEO Assures
Many people in India use a phone payment system called UPI to send and receive money.
The government passed a new law that could allow businesses to be charged a small fee for some UPI payments.
This fee is called Merchant Discount Rate, or MDR.
MDR is normally paid by businesses, not by regular people.
Some people worried that customers might soon have to pay extra to use UPI.
The boss of PhonePe, Sameer Nigam, said UPI is and will remain free for all Indian consumers.
The Payments Council of India also said UPI stays free for consumers.
Small shops and merchants will not have to pay the fee either.
If the fee happens, it would only apply to some business payments above two thousand rupees.
Money sent between friends and family would not be affected.
So for now, using UPI for everyday payments remains free for everyone.
PhonePe CEO Sameer Nigam said UPI is and will remain free for all Indian consumers, who will not be charged for making payments.
The clarification follows the Lok Sabha's passage of the Taxation and Other Laws (Amendment) Bill, 2026, which allows MDR on select electronic payment modes.
The Payments Council of India said UPI stays free for consumers and small merchants will not have to pay MDR to accept UPI payments.
Reports suggest a possible MDR of 0.25% to 0.4% on business UPI transactions above ₹2,000, while person-to-person payments remain exempt.
Google Pay and Walmart-controlled PhonePe together process over 80 per cent of UPI transactions in India.
The Centre operates an incentive scheme reimbursing banks for eligible low-value UPI transactions made to small merchants.
- Who
- PhonePe CEO Sameer Nigam, the Payments Council of India, and the Lok Sabha, which passed the Taxation and Other Laws (Amendment) Bill, 2026.
- What
- Clarified that UPI payments will remain free for consumers amid a debate over possible Merchant Discount Rate (MDR) charges on certain business UPI transactions.
- Where
- India.
- When
- Saturday, following the passage of the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha.
- Why
- To reassure consumers that the digital payment system will stay free, since any applicable merchant service charges would be commercial arrangements between merchants and payment service providers, not charges on consumers.
Keep UPI Free
Sustainable Funding
Merchant Discount Rate on UPI transactions
Keep UPI Free
UPI should remain free for consumers and small merchants, with no additional burden, to preserve the widespread adoption and inclusive growth of digital payments.
Sustainable Funding
The rapidly expanding UPI ecosystem needs a funding mechanism such as MDR on selected large business transactions, since processing costs have so far been absorbed by banks, payment companies and other stakeholders.
Key facts
- UPI payments for consumers
- Free, with no charges to be collected from customers
- Proposed MDR range
- 0.25% to 0.4% on certain business UPI transactions
- MDR threshold
- Business UPI transactions above ₹2,000
- Exempt transactions
- Person-to-person payments and small merchants
- Legal basis
- Taxation and Other Laws (Amendment) Bill, 2026
- Legislative body
- Lok Sabha
- UPI market share
- Google Pay and PhonePe process over 80% of UPI transactions
- MDR definition
- Fee paid by businesses to entities processing digital payment transactions
Quotes
Payments Council of India
Industry body representing payment service providers
“"Merchant service charges, where applicable, are commercial arrangements between merchants and payment service providers. They do not mean that consumers pay to use digital payments."”
livemint.com
“UPI payments would remain free for consumers and that small merchants would not have to pay MDR for accepting UPI transactions”
freepressjournal.in
Sources
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