Archive · 7 Aug 2026
UPI Payments Remain Free as New Bill Explains MDR
India's government passed a new law about paying with phones.
It is called the Taxation and Other Laws Amendment Bill, 2026.
Some people got worried that they would have to pay new fees for using UPI.
The law does not charge people right now.
It just gives the government permission to decide about fees later.
A fee called MDR might be paid by shop owners, not by customers.
Sending money to friends and family stays free.
The government has not decided when or how much any fee will be.
Maybe shops will charge a little more if they have to pay fees.
Until then, people can keep using UPI like before.
The Taxation and Other Laws Amendment Bill, 2026, passed in the Lok Sabha, giving the government power to decide which digital payments may attract a Merchant Discount Rate (MDR).
The Bill does not impose an immediate fee on UPI payments, and the final rate and starting date have not been announced.
Finance Minister Nirmala Sitharaman said any MDR would be charged to merchants, such as shops and businesses, and not directly to customers.
UPI transfers between individuals and regular bank account payments remain free for now, while discussions have focused on larger merchant payments above Rs 2,000.
RBI Governor Sanjay Malhotra said the costs of running UPI must ultimately be met by someone, with the government yet to decide who bears them.
- Who
- The Government of India, Finance Minister Nirmala Sitharaman, RBI Governor Sanjay Malhotra, and the Lok Sabha.
- What
- The passage of the Taxation and Other Laws Amendment Bill, 2026, which grants the government power to decide which digital payments may attract a Merchant Discount Rate but does not impose an immediate UPI fee.
- When
- 2026, following passage of the Bill in the Lok Sabha.
- Where
- India, specifically in the Lok Sabha.
- Why
- To determine how the costs of running UPI, including servers, fraud controls, cyber security and customer support, will be met.
- Bill
- Taxation and Other Laws Amendment Bill, 2026
- Status
- Passed in the Lok Sabha
- Immediate UPI fee
- None
- MDR charged to
- Merchants, not customers
- Discussion focus
- Larger merchant payments above Rs 2,000
- Remaining free
- UPI transfers between individuals and regular bank account payments
- Final rate and date
- Not yet announced
- Key officials
- Finance Minister Nirmala Sitharaman; RBI Governor Sanjay Malhotra