The government has clarified that no charges will be levied on UPI...
The government has clarified that there will be no charges on UPI users. According to the government, P2P transactions will remain free and a nominal...
By GT24x7 Reporter··GlobalToday24x7
The Indian government has clarified that no transaction charges will be levied on users making payments through UPI. The government also stated that all 'person-to-person' (P2P) transactions will remain free.
According to the government, if a 'Merchant Discount Rate' (MDR) is implemented in future, it will be applied only to a limited number of merchant transactions above a certain threshold and at a nominal rate. This rate will be much lower than the MDR applicable to debit or credit cards. Most UPI transactions for merchants will also remain free and MDR will not be applicable on every transaction.
The government clarified that after the passage of the 'Taxation and Other Laws (Amendment) Bill, 2026' by Parliament and as per the proposed amendment to Section 10A of the 'Payment and Settlement Systems Act, 2007', any applicable MDR will be determined by the 'UPI and Services Steering Committee' chaired by NPCI.
The government said that the purpose of amending the 'Payment and Settlement Systems Act' is not to impose charges on ordinary UPI users, but to ensure the long-term sustainability of the system, its ability to cope with technological advancements and emerging threats. Given the increasing number of transactions, there is a need for continuous investment in cybersecurity, fraud prevention and infrastructure.
According to the government, a 'self-sustaining revenue model' is necessary to increase competition in the market and encourage more companies to expand into the UPI ecosystem. The government noted that relying solely on subsidies for the next phase of UPI's growth is not viable. The government also dismissed media reports suggesting external influence behind the policy change as incorrect and misleading; the government pointed out that if there was external pressure, UPI would not have been launched in 2016, nor would it have been made free for citizens and merchants from January 2020.
The government emphasized that this reform should be viewed from a broader perspective of keeping India's digital payments infrastructure sustainable, competitive, and innovative, as well as keeping it relevant to the needs of a rapidly growing digital economy.
The government has once again clarified that UPI will remain free for citizens and there will be no charges on daily transactions. If any MDR is implemented in future, it will be nominal and will apply only to limited merchant transactions. According to the government, UPI has brought about a radical change in India's digital economy since its launch in 2016-17. In July 2026, 2,366 crore transactions were processed through UPI, with a total value of Rs 29.9 lakh crore. UPI is now operational in 11 foreign countries and many other countries have shown interest in it.
The government has appealed to citizens to rely only on official information from the Ministry of Finance, Reserve Bank of India and NPCI and to avoid forwarding unverified messages.