New Delhi: The government has sought to address concerns over possible charges on UPI payments, saying ordinary users will continue to make transactions without paying any fee even as a framework for the long-term sustainability of the digital payments ecosystem is considered.
The Ministry of Finance said on 8 August that consumers making payments through the Unified Payments Interface (UPI) will not face transaction charges, while all Person-to-Person transactions will continue to remain free.
The ministry said any Merchant Discount Rate (MDR), if introduced in the future, would apply only to a limited category of merchant transactions above a specified threshold.
It added that such an MDR, if approved, would be nominal and substantially lower than the MDR currently applicable to debit or credit card transactions.
The government also clarified that there would be no blanket MDR on all UPI merchant payments and that the vast majority of merchant transactions would continue to remain free.
The clarification comes amid discussion over the Taxation and Other Laws (Amendment) Bill, 2026, which proposes changes to Section 10A of the Payment and Settlement Systems Act, 2007.
According to the ministry, after Parliament passes the Bill, the UPI and Services Steering Committee headed by the National Payments Corporation of India (NPCI) will take a decision on MDR, if any, and determine the framework under which it may operate.
The government said the proposed amendment is an enabling provision intended to support the long-term sustainability, technological development and resilience of the UPI ecosystem rather than impose charges on ordinary users.
The ministry said the rapid growth in UPI transactions requires continued investment in cybersecurity, fraud prevention, payment infrastructure and technological upgrades.
It also said greater competition in the digital payments ecosystem and the entry and expansion of more service providers would require a financially sustainable operating model.
According to the government, depending indefinitely on subsidies alone may not be sufficient to support the next phase of UPI expansion.
UPI has remained free for citizens as well as merchants since January 2020, the ministry said.
The platform has since recorded a sharp increase in transaction volumes. In July 2026, UPI processed 2,366 crore transactions worth ₹29.9 lakh crore, according to the Finance Ministry.
Read also: India operationalises export-only inventory model for cross-border e-commerce under FTP 2023
Read also: India Achieves Near-Universal Banking Coverage; 99.92% of Inhabited Villages Now Have Banking Access
